Correlation Between Shanghai CEO and Shandong Longquan
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By analyzing existing cross correlation between Shanghai CEO Environmental and Shandong Longquan Pipeline, you can compare the effects of market volatilities on Shanghai CEO and Shandong Longquan 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 CEO with a short position of Shandong Longquan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai CEO and Shandong Longquan.
Diversification Opportunities for Shanghai CEO and Shandong Longquan
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shanghai and Shandong is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai CEO Environmental and Shandong Longquan Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Longquan and Shanghai CEO 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 CEO Environmental are associated (or correlated) with Shandong Longquan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Longquan has no effect on the direction of Shanghai CEO i.e., Shanghai CEO and Shandong Longquan go up and down completely randomly.
Pair Corralation between Shanghai CEO and Shandong Longquan
Assuming the 90 days trading horizon Shanghai CEO is expected to generate 1.17 times less return on investment than Shandong Longquan. But when comparing it to its historical volatility, Shanghai CEO Environmental is 1.1 times less risky than Shandong Longquan. It trades about 0.16 of its potential returns per unit of risk. Shandong Longquan Pipeline is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 361.00 in Shandong Longquan Pipeline on August 25, 2024 and sell it today you would earn a total of 94.00 from holding Shandong Longquan Pipeline or generate 26.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai CEO Environmental vs. Shandong Longquan Pipeline
Performance |
| Timeline |
| Shanghai CEO Environ |
| Shandong Longquan |
Shanghai CEO and Shandong Longquan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai CEO and Shandong Longquan
The main advantage of trading using opposite Shanghai CEO and Shandong Longquan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai CEO position performs unexpectedly, Shandong Longquan 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 Shandong Longquan will offset losses from the drop in Shandong Longquan's long position.| Shanghai CEO vs. Zhongyin Babi Food | Shanghai CEO vs. New Hope Dairy | Shanghai CEO vs. Nexchip Semiconductor Corp | Shanghai CEO vs. Eastroc Beverage 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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