Correlation Between Shanghai Yanpu and Jiangsu Zhongtian
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By analyzing existing cross correlation between Shanghai Yanpu Metal and Jiangsu Zhongtian Technology, you can compare the effects of market volatilities on Shanghai Yanpu and Jiangsu Zhongtian 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 Yanpu with a short position of Jiangsu Zhongtian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Yanpu and Jiangsu Zhongtian.
Diversification Opportunities for Shanghai Yanpu and Jiangsu Zhongtian
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shanghai and Jiangsu is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Yanpu Metal and Jiangsu Zhongtian Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Zhongtian and Shanghai Yanpu 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 Yanpu Metal are associated (or correlated) with Jiangsu Zhongtian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Zhongtian has no effect on the direction of Shanghai Yanpu i.e., Shanghai Yanpu and Jiangsu Zhongtian go up and down completely randomly.
Pair Corralation between Shanghai Yanpu and Jiangsu Zhongtian
Assuming the 90 days trading horizon Shanghai Yanpu Metal is expected to generate 1.39 times more return on investment than Jiangsu Zhongtian. However, Shanghai Yanpu is 1.39 times more volatile than Jiangsu Zhongtian Technology. It trades about 0.03 of its potential returns per unit of risk. Jiangsu Zhongtian Technology is currently generating about -0.09 per unit of risk. If you would invest 3,691 in Shanghai Yanpu Metal on September 26, 2024 and sell it today you would earn a total of 27.00 from holding Shanghai Yanpu Metal or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Yanpu Metal vs. Jiangsu Zhongtian Technology
Performance |
| Timeline |
| Shanghai Yanpu Metal |
| Jiangsu Zhongtian |
Shanghai Yanpu and Jiangsu Zhongtian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Yanpu and Jiangsu Zhongtian
The main advantage of trading using opposite Shanghai Yanpu and Jiangsu Zhongtian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Yanpu position performs unexpectedly, Jiangsu Zhongtian 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 Jiangsu Zhongtian will offset losses from the drop in Jiangsu Zhongtian's long position.| Shanghai Yanpu vs. China Life Insurance | Shanghai Yanpu vs. Cinda Securities Co | Shanghai Yanpu vs. Piotech Inc A | Shanghai Yanpu vs. Dongxing Sec Co |
| Jiangsu Zhongtian vs. Kweichow Moutai Co | Jiangsu Zhongtian vs. Contemporary Amperex Technology | Jiangsu Zhongtian vs. G bits Network Technology | Jiangsu Zhongtian vs. BYD Co Ltd |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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