Correlation Between Shanghai Rongtai and Jahen Household
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By analyzing existing cross correlation between Shanghai Rongtai Health and Jahen Household Products, you can compare the effects of market volatilities on Shanghai Rongtai and Jahen Household 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 Jahen Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rongtai and Jahen Household.
Diversification Opportunities for Shanghai Rongtai and Jahen Household
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shanghai and Jahen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rongtai Health and Jahen Household Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jahen Household Products 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 Jahen Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jahen Household Products has no effect on the direction of Shanghai Rongtai i.e., Shanghai Rongtai and Jahen Household go up and down completely randomly.
Pair Corralation between Shanghai Rongtai and Jahen Household
Assuming the 90 days trading horizon Shanghai Rongtai is expected to generate 2.22 times less return on investment than Jahen Household. But when comparing it to its historical volatility, Shanghai Rongtai Health is 1.43 times less risky than Jahen Household. It trades about 0.09 of its potential returns per unit of risk. Jahen Household Products is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,405 in Jahen Household Products on November 7, 2024 and sell it today you would earn a total of 74.00 from holding Jahen Household Products or generate 5.27% 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. Jahen Household Products
Performance |
| Timeline |
| Shanghai Rongtai Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Jahen Household Products |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shanghai Rongtai and Jahen Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Rongtai and Jahen Household
The main advantage of trading using opposite Shanghai Rongtai and Jahen Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Rongtai position performs unexpectedly, Jahen Household 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 Jahen Household will offset losses from the drop in Jahen Household's long position.The idea behind Shanghai Rongtai Health and Jahen Household Products 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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