Correlation Between Shanghai Yanpu and Ye Chiu
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By analyzing existing cross correlation between Shanghai Yanpu Metal and Ye Chiu Metal, you can compare the effects of market volatilities on Shanghai Yanpu and Ye Chiu 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 Ye Chiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Yanpu and Ye Chiu.
Diversification Opportunities for Shanghai Yanpu and Ye Chiu
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shanghai and 601388 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Yanpu Metal and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal 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 Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of Shanghai Yanpu i.e., Shanghai Yanpu and Ye Chiu go up and down completely randomly.
Pair Corralation between Shanghai Yanpu and Ye Chiu
Assuming the 90 days trading horizon Shanghai Yanpu Metal is expected to generate 1.02 times more return on investment than Ye Chiu. However, Shanghai Yanpu is 1.02 times more volatile than Ye Chiu Metal. It trades about 0.04 of its potential returns per unit of risk. Ye Chiu Metal is currently generating about -0.09 per unit of risk. If you would invest 3,595 in Shanghai Yanpu Metal on November 7, 2024 and sell it today you would earn a total of 32.00 from holding Shanghai Yanpu Metal or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Yanpu Metal vs. Ye Chiu Metal
Performance |
| Timeline |
| Shanghai Yanpu Metal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ye Chiu Metal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shanghai Yanpu and Ye Chiu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Yanpu and Ye Chiu
The main advantage of trading using opposite Shanghai Yanpu and Ye Chiu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Yanpu position performs unexpectedly, Ye Chiu 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 Ye Chiu will offset losses from the drop in Ye Chiu's long position.The idea behind Shanghai Yanpu Metal and Ye Chiu Metal 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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