Correlation Between Shanghai Shuixing and Guizhou Chanhen
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By analyzing existing cross correlation between Shanghai Shuixing Home and Guizhou Chanhen Chemical, you can compare the effects of market volatilities on Shanghai Shuixing and Guizhou Chanhen 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 Guizhou Chanhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Shuixing and Guizhou Chanhen.
Diversification Opportunities for Shanghai Shuixing and Guizhou Chanhen
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Guizhou is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Shuixing Home and Guizhou Chanhen Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou Chanhen Chemical 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 Guizhou Chanhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou Chanhen Chemical has no effect on the direction of Shanghai Shuixing i.e., Shanghai Shuixing and Guizhou Chanhen go up and down completely randomly.
Pair Corralation between Shanghai Shuixing and Guizhou Chanhen
Assuming the 90 days trading horizon Shanghai Shuixing Home is expected to under-perform the Guizhou Chanhen. In addition to that, Shanghai Shuixing is 1.33 times more volatile than Guizhou Chanhen Chemical. It trades about -0.16 of its total potential returns per unit of risk. Guizhou Chanhen Chemical is currently generating about -0.11 per unit of volatility. If you would invest 2,250 in Guizhou Chanhen Chemical on October 14, 2024 and sell it today you would lose (132.00) from holding Guizhou Chanhen Chemical or give up 5.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Shuixing Home vs. Guizhou Chanhen Chemical
Performance |
| Timeline |
| Shanghai Shuixing Home |
| Guizhou Chanhen Chemical |
Shanghai Shuixing and Guizhou Chanhen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Shuixing and Guizhou Chanhen
The main advantage of trading using opposite Shanghai Shuixing and Guizhou Chanhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Shuixing position performs unexpectedly, Guizhou Chanhen 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 Guizhou Chanhen will offset losses from the drop in Guizhou Chanhen's long position.| Shanghai Shuixing vs. Soyea Technology Co | Shanghai Shuixing vs. Guangdong Xiongsu Technology | Shanghai Shuixing vs. Kingsignal Technology Co | Shanghai Shuixing vs. Shuhua Sports Co |
| Guizhou Chanhen vs. Xiamen Goldenhome Co | Guizhou Chanhen vs. China Sports Industry | Guizhou Chanhen vs. Shanghai Shuixing Home | Guizhou Chanhen vs. Oppein Home Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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