Correlation Between Allied Machinery and HeNan Splendor
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By analyzing existing cross correlation between Allied Machinery Co and HeNan Splendor Science, you can compare the effects of market volatilities on Allied Machinery and HeNan Splendor 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 HeNan Splendor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Machinery and HeNan Splendor.
Diversification Opportunities for Allied Machinery and HeNan Splendor
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Allied and HeNan is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Allied Machinery Co and HeNan Splendor Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeNan Splendor Science 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 HeNan Splendor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeNan Splendor Science has no effect on the direction of Allied Machinery i.e., Allied Machinery and HeNan Splendor go up and down completely randomly.
Pair Corralation between Allied Machinery and HeNan Splendor
Assuming the 90 days trading horizon Allied Machinery Co is expected to under-perform the HeNan Splendor. In addition to that, Allied Machinery is 1.89 times more volatile than HeNan Splendor Science. It trades about -0.05 of its total potential returns per unit of risk. HeNan Splendor Science is currently generating about 0.37 per unit of volatility. If you would invest 899.00 in HeNan Splendor Science on November 9, 2024 and sell it today you would earn a total of 176.00 from holding HeNan Splendor Science or generate 19.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Machinery Co vs. HeNan Splendor Science
Performance |
| Timeline |
| Allied Machinery |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
| HeNan Splendor Science |
Risk-Adjusted Performance
Modest
Weak | Strong |
Allied Machinery and HeNan Splendor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Machinery and HeNan Splendor
The main advantage of trading using opposite Allied Machinery and HeNan Splendor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Machinery position performs unexpectedly, HeNan Splendor 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 HeNan Splendor will offset losses from the drop in HeNan Splendor's long position.The idea behind Allied Machinery Co and HeNan Splendor Science 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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