Correlation Between Aofu Environmental and Shaanxi Construction
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By analyzing existing cross correlation between Aofu Environmental Technology and Shaanxi Construction Machinery, you can compare the effects of market volatilities on Aofu Environmental and Shaanxi Construction 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 Aofu Environmental with a short position of Shaanxi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aofu Environmental and Shaanxi Construction.
Diversification Opportunities for Aofu Environmental and Shaanxi Construction
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aofu and Shaanxi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aofu Environmental Technology and Shaanxi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Construction and Aofu Environmental 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 Aofu Environmental Technology are associated (or correlated) with Shaanxi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Construction has no effect on the direction of Aofu Environmental i.e., Aofu Environmental and Shaanxi Construction go up and down completely randomly.
Pair Corralation between Aofu Environmental and Shaanxi Construction
Assuming the 90 days trading horizon Aofu Environmental Technology is expected to under-perform the Shaanxi Construction. In addition to that, Aofu Environmental is 1.0 times more volatile than Shaanxi Construction Machinery. It trades about -0.05 of its total potential returns per unit of risk. Shaanxi Construction Machinery is currently generating about -0.03 per unit of volatility. If you would invest 622.00 in Shaanxi Construction Machinery on October 14, 2024 and sell it today you would lose (317.00) from holding Shaanxi Construction Machinery or give up 50.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aofu Environmental Technology vs. Shaanxi Construction Machinery
Performance |
| Timeline |
| Aofu Environmental |
| Shaanxi Construction |
Aofu Environmental and Shaanxi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aofu Environmental and Shaanxi Construction
The main advantage of trading using opposite Aofu Environmental and Shaanxi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aofu Environmental position performs unexpectedly, Shaanxi Construction 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 Shaanxi Construction will offset losses from the drop in Shaanxi Construction's long position.| Aofu Environmental vs. Penyao Environmental Protection | Aofu Environmental vs. Shenwu Energy Saving | Aofu Environmental vs. Shenzhen MYS Environmental | Aofu Environmental vs. GreenTech Environmental Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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