Correlation Between GreenTech Environmental and Shandong Ruifeng
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By analyzing existing cross correlation between GreenTech Environmental Co and Shandong Ruifeng Chemical, you can compare the effects of market volatilities on GreenTech Environmental and Shandong Ruifeng 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 GreenTech Environmental with a short position of Shandong Ruifeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenTech Environmental and Shandong Ruifeng.
Diversification Opportunities for GreenTech Environmental and Shandong Ruifeng
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GreenTech and Shandong is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding GreenTech Environmental Co and Shandong Ruifeng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Ruifeng Chemical and GreenTech 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 GreenTech Environmental Co are associated (or correlated) with Shandong Ruifeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Ruifeng Chemical has no effect on the direction of GreenTech Environmental i.e., GreenTech Environmental and Shandong Ruifeng go up and down completely randomly.
Pair Corralation between GreenTech Environmental and Shandong Ruifeng
Assuming the 90 days trading horizon GreenTech Environmental is expected to generate 5.33 times less return on investment than Shandong Ruifeng. But when comparing it to its historical volatility, GreenTech Environmental Co is 1.27 times less risky than Shandong Ruifeng. It trades about 0.01 of its potential returns per unit of risk. Shandong Ruifeng Chemical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 955.00 in Shandong Ruifeng Chemical on August 28, 2024 and sell it today you would earn a total of 336.00 from holding Shandong Ruifeng Chemical or generate 35.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GreenTech Environmental Co vs. Shandong Ruifeng Chemical
Performance |
| Timeline |
| GreenTech Environmental |
| Shandong Ruifeng Chemical |
GreenTech Environmental and Shandong Ruifeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenTech Environmental and Shandong Ruifeng
The main advantage of trading using opposite GreenTech Environmental and Shandong Ruifeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenTech Environmental position performs unexpectedly, Shandong Ruifeng 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 Ruifeng will offset losses from the drop in Shandong Ruifeng's long position.The idea behind GreenTech Environmental Co and Shandong Ruifeng Chemical 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.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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