Correlation Between Xingguang Agricultural and Zhejiang Qianjiang
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By analyzing existing cross correlation between Xingguang Agricultural Mach and Zhejiang Qianjiang Motorcycle, you can compare the effects of market volatilities on Xingguang Agricultural and Zhejiang Qianjiang 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 Xingguang Agricultural with a short position of Zhejiang Qianjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xingguang Agricultural and Zhejiang Qianjiang.
Diversification Opportunities for Xingguang Agricultural and Zhejiang Qianjiang
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xingguang and Zhejiang is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xingguang Agricultural Mach and Zhejiang Qianjiang Motorcycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Qianjiang and Xingguang Agricultural 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 Xingguang Agricultural Mach are associated (or correlated) with Zhejiang Qianjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Qianjiang has no effect on the direction of Xingguang Agricultural i.e., Xingguang Agricultural and Zhejiang Qianjiang go up and down completely randomly.
Pair Corralation between Xingguang Agricultural and Zhejiang Qianjiang
Assuming the 90 days trading horizon Xingguang Agricultural Mach is expected to generate 3.33 times more return on investment than Zhejiang Qianjiang. However, Xingguang Agricultural is 3.33 times more volatile than Zhejiang Qianjiang Motorcycle. It trades about 0.51 of its potential returns per unit of risk. Zhejiang Qianjiang Motorcycle is currently generating about -0.22 per unit of risk. If you would invest 595.00 in Xingguang Agricultural Mach on November 27, 2024 and sell it today you would earn a total of 271.00 from holding Xingguang Agricultural Mach or generate 45.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xingguang Agricultural Mach vs. Zhejiang Qianjiang Motorcycle
Performance |
| Timeline |
| Xingguang Agricultural |
| Zhejiang Qianjiang |
Xingguang Agricultural and Zhejiang Qianjiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xingguang Agricultural and Zhejiang Qianjiang
The main advantage of trading using opposite Xingguang Agricultural and Zhejiang Qianjiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xingguang Agricultural position performs unexpectedly, Zhejiang Qianjiang 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 Zhejiang Qianjiang will offset losses from the drop in Zhejiang Qianjiang's long position.The idea behind Xingguang Agricultural Mach and Zhejiang Qianjiang Motorcycle 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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