Correlation Between Shanghai Shuixing and Guangzhou Dongfang
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By analyzing existing cross correlation between Shanghai Shuixing Home and Guangzhou Dongfang Hotel, you can compare the effects of market volatilities on Shanghai Shuixing and Guangzhou Dongfang 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 Shanghai Shuixing with a short position of Guangzhou Dongfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Shuixing and Guangzhou Dongfang.
Diversification Opportunities for Shanghai Shuixing and Guangzhou Dongfang
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shanghai and Guangzhou is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Shuixing Home and Guangzhou Dongfang Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Dongfang Hotel and Shanghai Shuixing 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 Shanghai Shuixing Home are associated (or correlated) with Guangzhou Dongfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Dongfang Hotel has no effect on the direction of Shanghai Shuixing i.e., Shanghai Shuixing and Guangzhou Dongfang go up and down completely randomly.
Pair Corralation between Shanghai Shuixing and Guangzhou Dongfang
Assuming the 90 days trading horizon Shanghai Shuixing Home is expected to under-perform the Guangzhou Dongfang. In addition to that, Shanghai Shuixing is 1.28 times more volatile than Guangzhou Dongfang Hotel. It trades about -0.15 of its total potential returns per unit of risk. Guangzhou Dongfang Hotel is currently generating about -0.16 per unit of volatility. If you would invest 1,026 in Guangzhou Dongfang Hotel on October 28, 2024 and sell it today you would lose (77.00) from holding Guangzhou Dongfang Hotel or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Shuixing Home vs. Guangzhou Dongfang Hotel
Performance |
| Timeline |
| Shanghai Shuixing Home |
| Guangzhou Dongfang Hotel |
Shanghai Shuixing and Guangzhou Dongfang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Shuixing and Guangzhou Dongfang
The main advantage of trading using opposite Shanghai Shuixing and Guangzhou Dongfang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Shuixing position performs unexpectedly, Guangzhou Dongfang 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 Guangzhou Dongfang will offset losses from the drop in Guangzhou Dongfang's long position.| Shanghai Shuixing vs. PetroChina Co Ltd | Shanghai Shuixing vs. China Mobile Limited | Shanghai Shuixing vs. CNOOC Limited | Shanghai Shuixing vs. Ping An Insurance |
| Guangzhou Dongfang vs. Pengxin International Mining | Guangzhou Dongfang vs. Guangdong Qunxing Toys | Guangzhou Dongfang vs. Shenzhen Zqgame | Guangzhou Dongfang vs. Bank of Communications |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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