Correlation Between Suzhou Weizhixiang and North Huajin
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By analyzing existing cross correlation between Suzhou Weizhixiang Food and North Huajin Chemical, you can compare the effects of market volatilities on Suzhou Weizhixiang and North Huajin 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 Suzhou Weizhixiang with a short position of North Huajin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzhou Weizhixiang and North Huajin.
Diversification Opportunities for Suzhou Weizhixiang and North Huajin
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Suzhou and North is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Suzhou Weizhixiang Food and North Huajin Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Huajin Chemical and Suzhou Weizhixiang 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 Suzhou Weizhixiang Food are associated (or correlated) with North Huajin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Huajin Chemical has no effect on the direction of Suzhou Weizhixiang i.e., Suzhou Weizhixiang and North Huajin go up and down completely randomly.
Pair Corralation between Suzhou Weizhixiang and North Huajin
Assuming the 90 days trading horizon Suzhou Weizhixiang Food is expected to generate 0.93 times more return on investment than North Huajin. However, Suzhou Weizhixiang Food is 1.08 times less risky than North Huajin. It trades about 0.19 of its potential returns per unit of risk. North Huajin Chemical is currently generating about 0.16 per unit of risk. If you would invest 1,766 in Suzhou Weizhixiang Food on September 2, 2024 and sell it today you would earn a total of 734.00 from holding Suzhou Weizhixiang Food or generate 41.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suzhou Weizhixiang Food vs. North Huajin Chemical
Performance |
| Timeline |
| Suzhou Weizhixiang Food |
| North Huajin Chemical |
Suzhou Weizhixiang and North Huajin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suzhou Weizhixiang and North Huajin
The main advantage of trading using opposite Suzhou Weizhixiang and North Huajin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzhou Weizhixiang position performs unexpectedly, North Huajin 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 North Huajin will offset losses from the drop in North Huajin's long position.The idea behind Suzhou Weizhixiang Food and North Huajin 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.
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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