Correlation Between Shandong Sinoglory and Shenzhen Glory
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By analyzing existing cross correlation between Shandong Sinoglory Health and Shenzhen Glory Medical, you can compare the effects of market volatilities on Shandong Sinoglory and Shenzhen Glory 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 Shandong Sinoglory with a short position of Shenzhen Glory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Sinoglory and Shenzhen Glory.
Diversification Opportunities for Shandong Sinoglory and Shenzhen Glory
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shandong and Shenzhen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Sinoglory Health and Shenzhen Glory Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Glory Medical and Shandong Sinoglory 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 Shandong Sinoglory Health are associated (or correlated) with Shenzhen Glory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Glory Medical has no effect on the direction of Shandong Sinoglory i.e., Shandong Sinoglory and Shenzhen Glory go up and down completely randomly.
Pair Corralation between Shandong Sinoglory and Shenzhen Glory
Assuming the 90 days trading horizon Shandong Sinoglory Health is expected to generate 0.69 times more return on investment than Shenzhen Glory. However, Shandong Sinoglory Health is 1.45 times less risky than Shenzhen Glory. It trades about 0.31 of its potential returns per unit of risk. Shenzhen Glory Medical is currently generating about 0.16 per unit of risk. If you would invest 1,105 in Shandong Sinoglory Health on November 7, 2024 and sell it today you would earn a total of 93.00 from holding Shandong Sinoglory Health or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Sinoglory Health vs. Shenzhen Glory Medical
Performance |
| Timeline |
| Shandong Sinoglory Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shenzhen Glory Medical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shandong Sinoglory and Shenzhen Glory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Sinoglory and Shenzhen Glory
The main advantage of trading using opposite Shandong Sinoglory and Shenzhen Glory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Sinoglory position performs unexpectedly, Shenzhen Glory 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 Shenzhen Glory will offset losses from the drop in Shenzhen Glory's long position.The idea behind Shandong Sinoglory Health and Shenzhen Glory Medical 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.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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