Correlation Between Shandong Huifa and North Chemical
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By analyzing existing cross correlation between Shandong Huifa Foodstuff and North Chemical Industries, you can compare the effects of market volatilities on Shandong Huifa and North Chemical 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 Huifa with a short position of North Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Huifa and North Chemical.
Diversification Opportunities for Shandong Huifa and North Chemical
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shandong and North is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Huifa Foodstuff and North Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Chemical Industries and Shandong Huifa 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 Huifa Foodstuff are associated (or correlated) with North Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Chemical Industries has no effect on the direction of Shandong Huifa i.e., Shandong Huifa and North Chemical go up and down completely randomly.
Pair Corralation between Shandong Huifa and North Chemical
Assuming the 90 days trading horizon Shandong Huifa Foodstuff is expected to generate 1.02 times more return on investment than North Chemical. However, Shandong Huifa is 1.02 times more volatile than North Chemical Industries. It trades about 0.08 of its potential returns per unit of risk. North Chemical Industries is currently generating about 0.07 per unit of risk. If you would invest 985.00 in Shandong Huifa Foodstuff on September 5, 2024 and sell it today you would earn a total of 109.00 from holding Shandong Huifa Foodstuff or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Huifa Foodstuff vs. North Chemical Industries
Performance |
| Timeline |
| Shandong Huifa Foodstuff |
| North Chemical Industries |
Shandong Huifa and North Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Huifa and North Chemical
The main advantage of trading using opposite Shandong Huifa and North Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Huifa position performs unexpectedly, North Chemical 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 North Chemical will offset losses from the drop in North Chemical's long position.| Shandong Huifa vs. Poly Real Estate | Shandong Huifa vs. China Vanke Co | Shandong Huifa vs. China Merchants Shekou | Shandong Huifa vs. Huafa Industrial Co |
| North Chemical vs. Beijing Sanyuan Foods | North Chemical vs. Innovative Medical Management | North Chemical vs. Shandong Huifa Foodstuff | North Chemical vs. Muyuan Foodstuff Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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