Correlation Between Milkyway Chemical and Bank of Jiangsu
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By analyzing existing cross correlation between Milkyway Chemical Supply and Bank of Jiangsu, you can compare the effects of market volatilities on Milkyway Chemical and Bank of Jiangsu 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 Milkyway Chemical with a short position of Bank of Jiangsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Milkyway Chemical and Bank of Jiangsu.
Diversification Opportunities for Milkyway Chemical and Bank of Jiangsu
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Milkyway and Bank is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Milkyway Chemical Supply and Bank of Jiangsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Jiangsu and Milkyway Chemical 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 Milkyway Chemical Supply are associated (or correlated) with Bank of Jiangsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Jiangsu has no effect on the direction of Milkyway Chemical i.e., Milkyway Chemical and Bank of Jiangsu go up and down completely randomly.
Pair Corralation between Milkyway Chemical and Bank of Jiangsu
Assuming the 90 days trading horizon Milkyway Chemical Supply is expected to under-perform the Bank of Jiangsu. In addition to that, Milkyway Chemical is 2.07 times more volatile than Bank of Jiangsu. It trades about -0.05 of its total potential returns per unit of risk. Bank of Jiangsu is currently generating about 0.05 per unit of volatility. If you would invest 683.00 in Bank of Jiangsu on August 27, 2024 and sell it today you would earn a total of 203.00 from holding Bank of Jiangsu or generate 29.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Milkyway Chemical Supply vs. Bank of Jiangsu
Performance |
| Timeline |
| Milkyway Chemical Supply |
| Bank of Jiangsu |
Milkyway Chemical and Bank of Jiangsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Milkyway Chemical and Bank of Jiangsu
The main advantage of trading using opposite Milkyway Chemical and Bank of Jiangsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Milkyway Chemical position performs unexpectedly, Bank of Jiangsu 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 Bank of Jiangsu will offset losses from the drop in Bank of Jiangsu's long position.The idea behind Milkyway Chemical Supply and Bank of Jiangsu 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.
| Bank of Jiangsu vs. North Huajin Chemical | Bank of Jiangsu vs. Jiajia Food Group | Bank of Jiangsu vs. Milkyway Chemical Supply | Bank of Jiangsu vs. Nantong Jiangshan Agrochemical |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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