Correlation Between Allied Machinery and Shantui Construction
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By analyzing existing cross correlation between Allied Machinery Co and Shantui Construction Machinery, you can compare the effects of market volatilities on Allied Machinery and Shantui Construction 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 Allied Machinery with a short position of Shantui Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Machinery and Shantui Construction.
Diversification Opportunities for Allied Machinery and Shantui Construction
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Allied and Shantui is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Allied Machinery Co and Shantui Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shantui Construction and Allied Machinery 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 Allied Machinery Co are associated (or correlated) with Shantui Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shantui Construction has no effect on the direction of Allied Machinery i.e., Allied Machinery and Shantui Construction go up and down completely randomly.
Pair Corralation between Allied Machinery and Shantui Construction
Assuming the 90 days trading horizon Allied Machinery Co is expected to generate 1.51 times more return on investment than Shantui Construction. However, Allied Machinery is 1.51 times more volatile than Shantui Construction Machinery. It trades about -0.09 of its potential returns per unit of risk. Shantui Construction Machinery is currently generating about -0.32 per unit of risk. If you would invest 1,685 in Allied Machinery Co on September 28, 2024 and sell it today you would lose (98.00) from holding Allied Machinery Co or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Machinery Co vs. Shantui Construction Machinery
Performance |
| Timeline |
| Allied Machinery |
| Shantui Construction |
Allied Machinery and Shantui Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Machinery and Shantui Construction
The main advantage of trading using opposite Allied Machinery and Shantui Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Machinery position performs unexpectedly, Shantui Construction 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 Shantui Construction will offset losses from the drop in Shantui Construction's long position.| Allied Machinery vs. Bank of China | Allied Machinery vs. Kweichow Moutai Co | Allied Machinery vs. PetroChina Co Ltd | Allied Machinery vs. Bank of Communications |
| Shantui Construction vs. ZYF Lopsking Aluminum | Shantui Construction vs. Western Metal Materials | Shantui Construction vs. Healthcare Co | Shantui Construction vs. Anhui Transport Consulting |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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