Correlation Between Shuhua Sports and Ligao Foods
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By analyzing existing cross correlation between Shuhua Sports Co and Ligao Foods CoLtd, you can compare the effects of market volatilities on Shuhua Sports and Ligao Foods 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 Shuhua Sports with a short position of Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shuhua Sports and Ligao Foods.
Diversification Opportunities for Shuhua Sports and Ligao Foods
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shuhua and Ligao is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shuhua Sports Co and Ligao Foods CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligao Foods CoLtd and Shuhua Sports 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 Shuhua Sports Co are associated (or correlated) with Ligao Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligao Foods CoLtd has no effect on the direction of Shuhua Sports i.e., Shuhua Sports and Ligao Foods go up and down completely randomly.
Pair Corralation between Shuhua Sports and Ligao Foods
Assuming the 90 days trading horizon Shuhua Sports Co is expected to generate 0.89 times more return on investment than Ligao Foods. However, Shuhua Sports Co is 1.12 times less risky than Ligao Foods. It trades about 0.0 of its potential returns per unit of risk. Ligao Foods CoLtd is currently generating about -0.05 per unit of risk. If you would invest 1,067 in Shuhua Sports Co on November 9, 2024 and sell it today you would lose (126.00) from holding Shuhua Sports Co or give up 11.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shuhua Sports Co vs. Ligao Foods CoLtd
Performance |
| Timeline |
| Shuhua Sports |
Risk-Adjusted Performance
OK
Weak | Strong |
| Ligao Foods CoLtd |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Shuhua Sports and Ligao Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shuhua Sports and Ligao Foods
The main advantage of trading using opposite Shuhua Sports and Ligao Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shuhua Sports position performs unexpectedly, Ligao Foods 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 Ligao Foods will offset losses from the drop in Ligao Foods' long position.The idea behind Shuhua Sports Co and Ligao Foods CoLtd 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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