Correlation Between Sichuan Hebang and Cangzhou Mingzhu
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By analyzing existing cross correlation between Sichuan Hebang Biotechnology and Cangzhou Mingzhu Plastic, you can compare the effects of market volatilities on Sichuan Hebang and Cangzhou Mingzhu 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 Sichuan Hebang with a short position of Cangzhou Mingzhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Hebang and Cangzhou Mingzhu.
Diversification Opportunities for Sichuan Hebang and Cangzhou Mingzhu
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sichuan and Cangzhou is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Hebang Biotechnology and Cangzhou Mingzhu Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cangzhou Mingzhu Plastic and Sichuan Hebang 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 Sichuan Hebang Biotechnology are associated (or correlated) with Cangzhou Mingzhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cangzhou Mingzhu Plastic has no effect on the direction of Sichuan Hebang i.e., Sichuan Hebang and Cangzhou Mingzhu go up and down completely randomly.
Pair Corralation between Sichuan Hebang and Cangzhou Mingzhu
Assuming the 90 days trading horizon Sichuan Hebang Biotechnology is expected to under-perform the Cangzhou Mingzhu. But the stock apears to be less risky and, when comparing its historical volatility, Sichuan Hebang Biotechnology is 1.09 times less risky than Cangzhou Mingzhu. The stock trades about -0.06 of its potential returns per unit of risk. The Cangzhou Mingzhu Plastic is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 362.00 in Cangzhou Mingzhu Plastic on October 26, 2024 and sell it today you would lose (24.00) from holding Cangzhou Mingzhu Plastic or give up 6.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Hebang Biotechnology vs. Cangzhou Mingzhu Plastic
Performance |
| Timeline |
| Sichuan Hebang Biote |
| Cangzhou Mingzhu Plastic |
Sichuan Hebang and Cangzhou Mingzhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Hebang and Cangzhou Mingzhu
The main advantage of trading using opposite Sichuan Hebang and Cangzhou Mingzhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Hebang position performs unexpectedly, Cangzhou Mingzhu 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 Cangzhou Mingzhu will offset losses from the drop in Cangzhou Mingzhu's long position.| Sichuan Hebang vs. Cangzhou Mingzhu Plastic | Sichuan Hebang vs. Western Metal Materials | Sichuan Hebang vs. Shandong Publishing Media | Sichuan Hebang vs. Super Dragon Engineering Plastics |
| Cangzhou Mingzhu vs. Zhejiang Kingland Pipeline | Cangzhou Mingzhu vs. Quectel Wireless Solutions | Cangzhou Mingzhu vs. Linkage Software Co | Cangzhou Mingzhu vs. Hainan HNA Infrastructure |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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