Correlation Between Shanghai Action and Fujian Longzhou
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By analyzing existing cross correlation between Shanghai Action Education and Fujian Longzhou Transportation, you can compare the effects of market volatilities on Shanghai Action and Fujian Longzhou 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 Shanghai Action with a short position of Fujian Longzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Action and Fujian Longzhou.
Diversification Opportunities for Shanghai Action and Fujian Longzhou
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shanghai and Fujian is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Action Education and Fujian Longzhou Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Longzhou Tran and Shanghai Action 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 Shanghai Action Education are associated (or correlated) with Fujian Longzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Longzhou Tran has no effect on the direction of Shanghai Action i.e., Shanghai Action and Fujian Longzhou go up and down completely randomly.
Pair Corralation between Shanghai Action and Fujian Longzhou
Assuming the 90 days trading horizon Shanghai Action Education is expected to generate 0.72 times more return on investment than Fujian Longzhou. However, Shanghai Action Education is 1.39 times less risky than Fujian Longzhou. It trades about 0.03 of its potential returns per unit of risk. Fujian Longzhou Transportation is currently generating about 0.01 per unit of risk. If you would invest 2,893 in Shanghai Action Education on October 16, 2024 and sell it today you would earn a total of 611.00 from holding Shanghai Action Education or generate 21.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Action Education vs. Fujian Longzhou Transportation
Performance |
| Timeline |
| Shanghai Action Education |
| Fujian Longzhou Tran |
Shanghai Action and Fujian Longzhou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Action and Fujian Longzhou
The main advantage of trading using opposite Shanghai Action and Fujian Longzhou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Action position performs unexpectedly, Fujian Longzhou 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 Fujian Longzhou will offset losses from the drop in Fujian Longzhou's long position.The idea behind Shanghai Action Education and Fujian Longzhou Transportation 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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