Correlation Between Henan Lantian and Shanxi Xishan
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By analyzing existing cross correlation between Henan Lantian Gas and Shanxi Xishan Coal, you can compare the effects of market volatilities on Henan Lantian and Shanxi Xishan 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 Henan Lantian with a short position of Shanxi Xishan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henan Lantian and Shanxi Xishan.
Diversification Opportunities for Henan Lantian and Shanxi Xishan
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Henan and Shanxi is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Henan Lantian Gas and Shanxi Xishan Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Xishan Coal and Henan Lantian 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 Henan Lantian Gas are associated (or correlated) with Shanxi Xishan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Xishan Coal has no effect on the direction of Henan Lantian i.e., Henan Lantian and Shanxi Xishan go up and down completely randomly.
Pair Corralation between Henan Lantian and Shanxi Xishan
Assuming the 90 days trading horizon Henan Lantian Gas is expected to under-perform the Shanxi Xishan. In addition to that, Henan Lantian is 1.42 times more volatile than Shanxi Xishan Coal. It trades about -0.17 of its total potential returns per unit of risk. Shanxi Xishan Coal is currently generating about -0.2 per unit of volatility. If you would invest 875.00 in Shanxi Xishan Coal on August 29, 2024 and sell it today you would lose (56.00) from holding Shanxi Xishan Coal or give up 6.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Henan Lantian Gas vs. Shanxi Xishan Coal
Performance |
| Timeline |
| Henan Lantian Gas |
| Shanxi Xishan Coal |
Henan Lantian and Shanxi Xishan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henan Lantian and Shanxi Xishan
The main advantage of trading using opposite Henan Lantian and Shanxi Xishan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henan Lantian position performs unexpectedly, Shanxi Xishan 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 Shanxi Xishan will offset losses from the drop in Shanxi Xishan's long position.| Henan Lantian vs. Cambricon Technologies Corp | Henan Lantian vs. Loongson Technology Corp | Henan Lantian vs. Chongqing Road Bridge | Henan Lantian vs. Shenzhen Fortune Trend |
| Shanxi Xishan vs. Zhejiang Kingland Pipeline | Shanxi Xishan vs. Xiangyang Automobile Bearing | Shanxi Xishan vs. Suzhou Novoprotein Scientific | Shanxi Xishan vs. COL Digital Publishing |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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