Correlation Between Shanghai Rongtai and Western Metal
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By analyzing existing cross correlation between Shanghai Rongtai Health and Western Metal Materials, you can compare the effects of market volatilities on Shanghai Rongtai and Western Metal 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 Rongtai with a short position of Western Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rongtai and Western Metal.
Diversification Opportunities for Shanghai Rongtai and Western Metal
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shanghai and Western is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rongtai Health and Western Metal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Metal Materials and Shanghai Rongtai 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 Rongtai Health are associated (or correlated) with Western Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Metal Materials has no effect on the direction of Shanghai Rongtai i.e., Shanghai Rongtai and Western Metal go up and down completely randomly.
Pair Corralation between Shanghai Rongtai and Western Metal
Assuming the 90 days trading horizon Shanghai Rongtai Health is expected to under-perform the Western Metal. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Rongtai Health is 1.05 times less risky than Western Metal. The stock trades about -0.01 of its potential returns per unit of risk. The Western Metal Materials is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,478 in Western Metal Materials on September 3, 2024 and sell it today you would earn a total of 138.00 from holding Western Metal Materials or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Rongtai Health vs. Western Metal Materials
Performance |
| Timeline |
| Shanghai Rongtai Health |
| Western Metal Materials |
Shanghai Rongtai and Western Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Rongtai and Western Metal
The main advantage of trading using opposite Shanghai Rongtai and Western Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Rongtai position performs unexpectedly, Western Metal 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 Western Metal will offset losses from the drop in Western Metal's long position.| Shanghai Rongtai vs. PetroChina Co Ltd | Shanghai Rongtai vs. China Mobile Limited | Shanghai Rongtai vs. Industrial and Commercial | Shanghai Rongtai vs. China Life Insurance |
| Western Metal vs. Haima Automobile Group | Western Metal vs. FSPG Hi Tech Co | Western Metal vs. Tianjin Hi Tech Development | Western Metal vs. Peoples Insurance of |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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