Correlation Between Xingguang Agricultural and Guangzhou Boji
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By analyzing existing cross correlation between Xingguang Agricultural Mach and Guangzhou Boji Medical, you can compare the effects of market volatilities on Xingguang Agricultural and Guangzhou Boji 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 Guangzhou Boji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xingguang Agricultural and Guangzhou Boji.
Diversification Opportunities for Xingguang Agricultural and Guangzhou Boji
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xingguang and Guangzhou is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Xingguang Agricultural Mach and Guangzhou Boji Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Boji Medical 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 Guangzhou Boji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Boji Medical has no effect on the direction of Xingguang Agricultural i.e., Xingguang Agricultural and Guangzhou Boji go up and down completely randomly.
Pair Corralation between Xingguang Agricultural and Guangzhou Boji
Assuming the 90 days trading horizon Xingguang Agricultural Mach is expected to generate 0.89 times more return on investment than Guangzhou Boji. However, Xingguang Agricultural Mach is 1.12 times less risky than Guangzhou Boji. It trades about 0.07 of its potential returns per unit of risk. Guangzhou Boji Medical is currently generating about 0.06 per unit of risk. If you would invest 723.00 in Xingguang Agricultural Mach on September 1, 2024 and sell it today you would earn a total of 191.00 from holding Xingguang Agricultural Mach or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xingguang Agricultural Mach vs. Guangzhou Boji Medical
Performance |
| Timeline |
| Xingguang Agricultural |
| Guangzhou Boji Medical |
Xingguang Agricultural and Guangzhou Boji Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xingguang Agricultural and Guangzhou Boji
The main advantage of trading using opposite Xingguang Agricultural and Guangzhou Boji positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xingguang Agricultural position performs unexpectedly, Guangzhou Boji 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 Guangzhou Boji will offset losses from the drop in Guangzhou Boji's long position.The idea behind Xingguang Agricultural Mach and Guangzhou Boji Medical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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