Correlation Between Sichuan Hebang and Shaanxi Construction
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By analyzing existing cross correlation between Sichuan Hebang Biotechnology and Shaanxi Construction Machinery, you can compare the effects of market volatilities on Sichuan Hebang and Shaanxi Construction 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 Shaanxi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Hebang and Shaanxi Construction.
Diversification Opportunities for Sichuan Hebang and Shaanxi Construction
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sichuan and Shaanxi is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Hebang Biotechnology and Shaanxi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Construction 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 Shaanxi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Construction has no effect on the direction of Sichuan Hebang i.e., Sichuan Hebang and Shaanxi Construction go up and down completely randomly.
Pair Corralation between Sichuan Hebang and Shaanxi Construction
Assuming the 90 days trading horizon Sichuan Hebang Biotechnology is expected to generate 0.53 times more return on investment than Shaanxi Construction. However, Sichuan Hebang Biotechnology is 1.87 times less risky than Shaanxi Construction. It trades about -0.05 of its potential returns per unit of risk. Shaanxi Construction Machinery is currently generating about -0.03 per unit of risk. If you would invest 314.00 in Sichuan Hebang Biotechnology on October 14, 2024 and sell it today you would lose (126.00) from holding Sichuan Hebang Biotechnology or give up 40.13% 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. Shaanxi Construction Machinery
Performance |
| Timeline |
| Sichuan Hebang Biote |
| Shaanxi Construction |
Sichuan Hebang and Shaanxi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Hebang and Shaanxi Construction
The main advantage of trading using opposite Sichuan Hebang and Shaanxi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Hebang position performs unexpectedly, Shaanxi Construction 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 Shaanxi Construction will offset losses from the drop in Shaanxi Construction's long position.| Sichuan Hebang vs. Namchow Food Group | Sichuan Hebang vs. Fiberhome Telecommunication Technologies | Sichuan Hebang vs. V V Food | Sichuan Hebang vs. Xinjiang Tianrun Dairy |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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