Correlation Between Shanghai Rongtai and China United
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By analyzing existing cross correlation between Shanghai Rongtai Health and China United Network, you can compare the effects of market volatilities on Shanghai Rongtai and China United 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 China United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rongtai and China United.
Diversification Opportunities for Shanghai Rongtai and China United
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shanghai and China is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rongtai Health and China United Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China United Network 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 China United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China United Network has no effect on the direction of Shanghai Rongtai i.e., Shanghai Rongtai and China United go up and down completely randomly.
Pair Corralation between Shanghai Rongtai and China United
Assuming the 90 days trading horizon Shanghai Rongtai Health is expected to under-perform the China United. In addition to that, Shanghai Rongtai is 1.11 times more volatile than China United Network. It trades about -0.02 of its total potential returns per unit of risk. China United Network is currently generating about 0.06 per unit of volatility. If you would invest 454.00 in China United Network on September 3, 2024 and sell it today you would earn a total of 61.00 from holding China United Network or generate 13.44% 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. China United Network
Performance |
| Timeline |
| Shanghai Rongtai Health |
| China United Network |
Shanghai Rongtai and China United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Rongtai and China United
The main advantage of trading using opposite Shanghai Rongtai and China United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Rongtai position performs unexpectedly, China United 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 China United will offset losses from the drop in China United'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 |
| China United vs. Xiwang Foodstuffs Co | China United vs. Bloomage Biotechnology Corp | China United vs. Great Sun Foods Co | China United vs. Guangdong Marubi Biotechnology |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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