Correlation Between Shanghai Rendu and Chengdu Kanghua
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By analyzing existing cross correlation between Shanghai Rendu Biotechnology and Chengdu Kanghua Biological, you can compare the effects of market volatilities on Shanghai Rendu and Chengdu Kanghua 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 Rendu with a short position of Chengdu Kanghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rendu and Chengdu Kanghua.
Diversification Opportunities for Shanghai Rendu and Chengdu Kanghua
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Chengdu is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rendu Biotechnology and Chengdu Kanghua Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Kanghua Biol and Shanghai Rendu 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 Rendu Biotechnology are associated (or correlated) with Chengdu Kanghua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Kanghua Biol has no effect on the direction of Shanghai Rendu i.e., Shanghai Rendu and Chengdu Kanghua go up and down completely randomly.
Pair Corralation between Shanghai Rendu and Chengdu Kanghua
Assuming the 90 days trading horizon Shanghai Rendu Biotechnology is expected to generate 1.36 times more return on investment than Chengdu Kanghua. However, Shanghai Rendu is 1.36 times more volatile than Chengdu Kanghua Biological. It trades about 0.15 of its potential returns per unit of risk. Chengdu Kanghua Biological is currently generating about -0.07 per unit of risk. If you would invest 3,833 in Shanghai Rendu Biotechnology on September 3, 2024 and sell it today you would earn a total of 405.00 from holding Shanghai Rendu Biotechnology or generate 10.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Rendu Biotechnology vs. Chengdu Kanghua Biological
Performance |
| Timeline |
| Shanghai Rendu Biote |
| Chengdu Kanghua Biol |
Shanghai Rendu and Chengdu Kanghua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Rendu and Chengdu Kanghua
The main advantage of trading using opposite Shanghai Rendu and Chengdu Kanghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Rendu position performs unexpectedly, Chengdu Kanghua 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 Chengdu Kanghua will offset losses from the drop in Chengdu Kanghua's long position.| Shanghai Rendu vs. Chengdu Kanghua Biological | Shanghai Rendu vs. Beijing Wantai Biological | Shanghai Rendu vs. Suzhou Novoprotein Scientific | Shanghai Rendu vs. Aluminum Corp of |
| Chengdu Kanghua vs. Chengdu Xinzhu RoadBridge | Chengdu Kanghua vs. China Life Insurance | Chengdu Kanghua vs. Shaanxi Broadcast TV | Chengdu Kanghua vs. Tianshan Aluminum Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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