Correlation Between Shanghai Rongtai and Jiangsu GDK
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By analyzing existing cross correlation between Shanghai Rongtai Health and Jiangsu GDK Biotechnology, you can compare the effects of market volatilities on Shanghai Rongtai and Jiangsu GDK 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 Jiangsu GDK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rongtai and Jiangsu GDK.
Diversification Opportunities for Shanghai Rongtai and Jiangsu GDK
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shanghai and Jiangsu is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rongtai Health and Jiangsu GDK Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu GDK Biotechnology 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 Jiangsu GDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu GDK Biotechnology has no effect on the direction of Shanghai Rongtai i.e., Shanghai Rongtai and Jiangsu GDK go up and down completely randomly.
Pair Corralation between Shanghai Rongtai and Jiangsu GDK
Assuming the 90 days trading horizon Shanghai Rongtai Health is expected to under-perform the Jiangsu GDK. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Rongtai Health is 1.86 times less risky than Jiangsu GDK. The stock trades about -0.01 of its potential returns per unit of risk. The Jiangsu GDK Biotechnology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,206 in Jiangsu GDK Biotechnology on September 25, 2024 and sell it today you would earn a total of 103.00 from holding Jiangsu GDK Biotechnology or generate 8.54% 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. Jiangsu GDK Biotechnology
Performance |
| Timeline |
| Shanghai Rongtai Health |
| Jiangsu GDK Biotechnology |
Shanghai Rongtai and Jiangsu GDK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Rongtai and Jiangsu GDK
The main advantage of trading using opposite Shanghai Rongtai and Jiangsu GDK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Rongtai position performs unexpectedly, Jiangsu GDK 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 Jiangsu GDK will offset losses from the drop in Jiangsu GDK's long position.| Shanghai Rongtai vs. PetroChina Co Ltd | Shanghai Rongtai vs. China Mobile Limited | Shanghai Rongtai vs. CNOOC Limited | Shanghai Rongtai vs. Ping An Insurance |
| Jiangsu GDK vs. Hubeiyichang Transportation Group | Jiangsu GDK vs. Xinjiang Baodi Mining | Jiangsu GDK vs. Shanghai Rongtai Health | Jiangsu GDK vs. Shenzhen Silver Basis |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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