Correlation Between Olympic Circuit and Shanxi Tond
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By analyzing existing cross correlation between Olympic Circuit Technology and Shanxi Tond Chemical, you can compare the effects of market volatilities on Olympic Circuit and Shanxi Tond 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 Olympic Circuit with a short position of Shanxi Tond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Circuit and Shanxi Tond.
Diversification Opportunities for Olympic Circuit and Shanxi Tond
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Olympic and Shanxi is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Circuit Technology and Shanxi Tond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Tond Chemical and Olympic Circuit 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 Olympic Circuit Technology are associated (or correlated) with Shanxi Tond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Tond Chemical has no effect on the direction of Olympic Circuit i.e., Olympic Circuit and Shanxi Tond go up and down completely randomly.
Pair Corralation between Olympic Circuit and Shanxi Tond
Assuming the 90 days trading horizon Olympic Circuit Technology is expected to generate 1.56 times more return on investment than Shanxi Tond. However, Olympic Circuit is 1.56 times more volatile than Shanxi Tond Chemical. It trades about 0.11 of its potential returns per unit of risk. Shanxi Tond Chemical is currently generating about -0.03 per unit of risk. If you would invest 1,681 in Olympic Circuit Technology on November 7, 2024 and sell it today you would earn a total of 1,548 from holding Olympic Circuit Technology or generate 92.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Circuit Technology vs. Shanxi Tond Chemical
Performance |
| Timeline |
| Olympic Circuit Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Shanxi Tond Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Olympic Circuit and Shanxi Tond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Circuit and Shanxi Tond
The main advantage of trading using opposite Olympic Circuit and Shanxi Tond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Circuit position performs unexpectedly, Shanxi Tond 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 Shanxi Tond will offset losses from the drop in Shanxi Tond's long position.The idea behind Olympic Circuit Technology and Shanxi Tond Chemical 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.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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