Correlation Between Hengdian Entertainment and Shanghai Newtouch
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By analyzing existing cross correlation between Hengdian Entertainment Co and Shanghai Newtouch Software, you can compare the effects of market volatilities on Hengdian Entertainment and Shanghai Newtouch 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 Shanghai Newtouch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengdian Entertainment and Shanghai Newtouch.
Diversification Opportunities for Hengdian Entertainment and Shanghai Newtouch
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hengdian and Shanghai is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hengdian Entertainment Co and Shanghai Newtouch Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Newtouch 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 Shanghai Newtouch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Newtouch has no effect on the direction of Hengdian Entertainment i.e., Hengdian Entertainment and Shanghai Newtouch go up and down completely randomly.
Pair Corralation between Hengdian Entertainment and Shanghai Newtouch
Assuming the 90 days trading horizon Hengdian Entertainment is expected to generate 5.31 times less return on investment than Shanghai Newtouch. But when comparing it to its historical volatility, Hengdian Entertainment Co is 1.61 times less risky than Shanghai Newtouch. It trades about 0.01 of its potential returns per unit of risk. Shanghai Newtouch Software is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,818 in Shanghai Newtouch Software on October 30, 2024 and sell it today you would earn a total of 33.00 from holding Shanghai Newtouch Software or generate 1.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hengdian Entertainment Co vs. Shanghai Newtouch Software
Performance |
Timeline |
Hengdian Entertainment |
Shanghai Newtouch |
Hengdian Entertainment and Shanghai Newtouch Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hengdian Entertainment and Shanghai Newtouch
The main advantage of trading using opposite Hengdian Entertainment and Shanghai Newtouch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengdian Entertainment position performs unexpectedly, Shanghai Newtouch 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 Shanghai Newtouch will offset losses from the drop in Shanghai Newtouch's long position.Hengdian Entertainment vs. GRG Banking Equipment | Hengdian Entertainment vs. Tongling Nonferrous Metals | Hengdian Entertainment vs. Industrial Bank Co | Hengdian Entertainment vs. Panda Financial Holding |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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