Correlation Between Shanghai Shuixing and Yindu Kitchen
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By analyzing existing cross correlation between Shanghai Shuixing Home and Yindu Kitchen Equipment, you can compare the effects of market volatilities on Shanghai Shuixing and Yindu Kitchen 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 Yindu Kitchen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Shuixing and Yindu Kitchen.
Diversification Opportunities for Shanghai Shuixing and Yindu Kitchen
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shanghai and Yindu is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Shuixing Home and Yindu Kitchen Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yindu Kitchen Equipment 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 Yindu Kitchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yindu Kitchen Equipment has no effect on the direction of Shanghai Shuixing i.e., Shanghai Shuixing and Yindu Kitchen go up and down completely randomly.
Pair Corralation between Shanghai Shuixing and Yindu Kitchen
Assuming the 90 days trading horizon Shanghai Shuixing Home is expected to under-perform the Yindu Kitchen. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Shuixing Home is 1.0 times less risky than Yindu Kitchen. The stock trades about -0.35 of its potential returns per unit of risk. The Yindu Kitchen Equipment is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,268 in Yindu Kitchen Equipment on November 7, 2024 and sell it today you would earn a total of 297.00 from holding Yindu Kitchen Equipment or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Shuixing Home vs. Yindu Kitchen Equipment
Performance |
| Timeline |
| Shanghai Shuixing Home |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Yindu Kitchen Equipment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Shanghai Shuixing and Yindu Kitchen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Shuixing and Yindu Kitchen
The main advantage of trading using opposite Shanghai Shuixing and Yindu Kitchen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Shuixing position performs unexpectedly, Yindu Kitchen 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 Yindu Kitchen will offset losses from the drop in Yindu Kitchen's long position.The idea behind Shanghai Shuixing Home and Yindu Kitchen Equipment 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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