Correlation Between Hefei Metalforming and Hangzhou Pinming
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By analyzing existing cross correlation between Hefei Metalforming Mach and Hangzhou Pinming Software, you can compare the effects of market volatilities on Hefei Metalforming and Hangzhou Pinming and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hefei Metalforming with a short position of Hangzhou Pinming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Hangzhou Pinming.
Diversification Opportunities for Hefei Metalforming and Hangzhou Pinming
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hefei and Hangzhou is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Hangzhou Pinming Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Pinming Software and Hefei Metalforming is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hefei Metalforming Mach are associated (or correlated) with Hangzhou Pinming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Pinming Software has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Hangzhou Pinming go up and down completely randomly.
Pair Corralation between Hefei Metalforming and Hangzhou Pinming
Assuming the 90 days trading horizon Hefei Metalforming Mach is expected to generate 1.01 times more return on investment than Hangzhou Pinming. However, Hefei Metalforming is 1.01 times more volatile than Hangzhou Pinming Software. It trades about 0.01 of its potential returns per unit of risk. Hangzhou Pinming Software is currently generating about 0.0 per unit of risk. If you would invest 740.00 in Hefei Metalforming Mach on October 16, 2024 and sell it today you would lose (64.00) from holding Hefei Metalforming Mach or give up 8.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hefei Metalforming Mach vs. Hangzhou Pinming Software
Performance |
| Timeline |
| Hefei Metalforming Mach |
| Hangzhou Pinming Software |
Hefei Metalforming and Hangzhou Pinming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hefei Metalforming and Hangzhou Pinming
The main advantage of trading using opposite Hefei Metalforming and Hangzhou Pinming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hefei Metalforming position performs unexpectedly, Hangzhou Pinming can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hangzhou Pinming will offset losses from the drop in Hangzhou Pinming's long position.The idea behind Hefei Metalforming Mach and Hangzhou Pinming Software pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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