Correlation Between Hengdian Entertainment and Zhejiang JIULI
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By analyzing existing cross correlation between Hengdian Entertainment Co and Zhejiang JIULI Hi tech, you can compare the effects of market volatilities on Hengdian Entertainment and Zhejiang JIULI 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 Hengdian Entertainment with a short position of Zhejiang JIULI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengdian Entertainment and Zhejiang JIULI.
Diversification Opportunities for Hengdian Entertainment and Zhejiang JIULI
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hengdian and Zhejiang is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hengdian Entertainment Co and Zhejiang JIULI Hi tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang JIULI Hi and Hengdian Entertainment 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 Hengdian Entertainment Co are associated (or correlated) with Zhejiang JIULI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang JIULI Hi has no effect on the direction of Hengdian Entertainment i.e., Hengdian Entertainment and Zhejiang JIULI go up and down completely randomly.
Pair Corralation between Hengdian Entertainment and Zhejiang JIULI
Assuming the 90 days trading horizon Hengdian Entertainment Co is expected to under-perform the Zhejiang JIULI. In addition to that, Hengdian Entertainment is 3.64 times more volatile than Zhejiang JIULI Hi tech. It trades about -0.37 of its total potential returns per unit of risk. Zhejiang JIULI Hi tech is currently generating about -0.21 per unit of volatility. If you would invest 2,389 in Zhejiang JIULI Hi tech on October 14, 2024 and sell it today you would lose (104.00) from holding Zhejiang JIULI Hi tech or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengdian Entertainment Co vs. Zhejiang JIULI Hi tech
Performance |
| Timeline |
| Hengdian Entertainment |
| Zhejiang JIULI Hi |
Hengdian Entertainment and Zhejiang JIULI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengdian Entertainment and Zhejiang JIULI
The main advantage of trading using opposite Hengdian Entertainment and Zhejiang JIULI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengdian Entertainment position performs unexpectedly, Zhejiang JIULI 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 Zhejiang JIULI will offset losses from the drop in Zhejiang JIULI's long position.The idea behind Hengdian Entertainment Co and Zhejiang JIULI Hi tech 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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