Correlation Between Zhejiang Yongjin and Long Yuan
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By analyzing existing cross correlation between Zhejiang Yongjin Metal and Long Yuan Construction, you can compare the effects of market volatilities on Zhejiang Yongjin and Long Yuan 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 Zhejiang Yongjin with a short position of Long Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Yongjin and Long Yuan.
Diversification Opportunities for Zhejiang Yongjin and Long Yuan
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zhejiang and Long is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Yongjin Metal and Long Yuan Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Yuan Construction and Zhejiang Yongjin 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 Zhejiang Yongjin Metal are associated (or correlated) with Long Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Yuan Construction has no effect on the direction of Zhejiang Yongjin i.e., Zhejiang Yongjin and Long Yuan go up and down completely randomly.
Pair Corralation between Zhejiang Yongjin and Long Yuan
Assuming the 90 days trading horizon Zhejiang Yongjin Metal is expected to under-perform the Long Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Zhejiang Yongjin Metal is 1.9 times less risky than Long Yuan. The stock trades about -0.19 of its potential returns per unit of risk. The Long Yuan Construction is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 423.00 in Long Yuan Construction on August 28, 2024 and sell it today you would lose (36.00) from holding Long Yuan Construction or give up 8.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhejiang Yongjin Metal vs. Long Yuan Construction
Performance |
| Timeline |
| Zhejiang Yongjin Metal |
| Long Yuan Construction |
Zhejiang Yongjin and Long Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhejiang Yongjin and Long Yuan
The main advantage of trading using opposite Zhejiang Yongjin and Long Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Yongjin position performs unexpectedly, Long Yuan 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 Long Yuan will offset losses from the drop in Long Yuan's long position.| Zhejiang Yongjin vs. Wanhua Chemical Group | Zhejiang Yongjin vs. Shandong Gold Mining | Zhejiang Yongjin vs. Rongsheng Petrochemical Co | Zhejiang Yongjin vs. Inner Mongolia BaoTou |
| Long Yuan vs. Ming Yang Smart | Long Yuan vs. 159681 | Long Yuan vs. 159005 | Long Yuan vs. Loctek Ergonomic Technology |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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