Correlation Between Allied Machinery and Shaanxi Construction
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By analyzing existing cross correlation between Allied Machinery Co and Shaanxi Construction Machinery, you can compare the effects of market volatilities on Allied Machinery and Shaanxi 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 Shaanxi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Machinery and Shaanxi Construction.
Diversification Opportunities for Allied Machinery and Shaanxi Construction
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Allied and Shaanxi is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Allied Machinery Co and Shaanxi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi 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 Shaanxi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Construction has no effect on the direction of Allied Machinery i.e., Allied Machinery and Shaanxi Construction go up and down completely randomly.
Pair Corralation between Allied Machinery and Shaanxi Construction
Assuming the 90 days trading horizon Allied Machinery is expected to generate 5.3 times less return on investment than Shaanxi Construction. But when comparing it to its historical volatility, Allied Machinery Co is 1.39 times less risky than Shaanxi Construction. It trades about 0.02 of its potential returns per unit of risk. Shaanxi Construction Machinery is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 243.00 in Shaanxi Construction Machinery on September 27, 2024 and sell it today you would earn a total of 97.00 from holding Shaanxi Construction Machinery or generate 39.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Machinery Co vs. Shaanxi Construction Machinery
Performance |
| Timeline |
| Allied Machinery |
| Shaanxi Construction |
Allied Machinery and Shaanxi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Machinery and Shaanxi Construction
The main advantage of trading using opposite Allied Machinery and Shaanxi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Machinery position performs unexpectedly, Shaanxi 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 Shaanxi Construction will offset losses from the drop in Shaanxi Construction's long position.| Allied Machinery vs. HeBei Jinniu Chemical | Allied Machinery vs. Markor International Home | Allied Machinery vs. Guizhou Chanhen Chemical | Allied Machinery vs. Xilong Chemical Co |
| Shaanxi Construction vs. Cambricon Technologies Corp | Shaanxi Construction vs. Loongson Technology Corp | Shaanxi Construction vs. Shenzhen Fortune Trend | Shaanxi Construction vs. Chongqing Road Bridge |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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