Correlation Between Liaoning Dingjide and Qingdao Choho
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By analyzing existing cross correlation between Liaoning Dingjide Petrochemical and Qingdao Choho Industrial, you can compare the effects of market volatilities on Liaoning Dingjide and Qingdao Choho 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 Liaoning Dingjide with a short position of Qingdao Choho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liaoning Dingjide and Qingdao Choho.
Diversification Opportunities for Liaoning Dingjide and Qingdao Choho
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Liaoning and Qingdao is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Liaoning Dingjide Petrochemica and Qingdao Choho Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Choho Industrial and Liaoning Dingjide 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 Liaoning Dingjide Petrochemical are associated (or correlated) with Qingdao Choho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Choho Industrial has no effect on the direction of Liaoning Dingjide i.e., Liaoning Dingjide and Qingdao Choho go up and down completely randomly.
Pair Corralation between Liaoning Dingjide and Qingdao Choho
Assuming the 90 days trading horizon Liaoning Dingjide Petrochemical is expected to under-perform the Qingdao Choho. In addition to that, Liaoning Dingjide is 1.44 times more volatile than Qingdao Choho Industrial. It trades about -0.08 of its total potential returns per unit of risk. Qingdao Choho Industrial is currently generating about 0.4 per unit of volatility. If you would invest 2,556 in Qingdao Choho Industrial on November 7, 2024 and sell it today you would earn a total of 533.00 from holding Qingdao Choho Industrial or generate 20.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liaoning Dingjide Petrochemica vs. Qingdao Choho Industrial
Performance |
| Timeline |
| Liaoning Dingjide |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Qingdao Choho Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Liaoning Dingjide and Qingdao Choho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liaoning Dingjide and Qingdao Choho
The main advantage of trading using opposite Liaoning Dingjide and Qingdao Choho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liaoning Dingjide position performs unexpectedly, Qingdao Choho 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 Qingdao Choho will offset losses from the drop in Qingdao Choho's long position.The idea behind Liaoning Dingjide Petrochemical and Qingdao Choho Industrial 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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