Correlation Between Shanghai Newtouch and XCMG Construction
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By analyzing existing cross correlation between Shanghai Newtouch Software and XCMG Construction Machinery, you can compare the effects of market volatilities on Shanghai Newtouch and XCMG 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 Shanghai Newtouch with a short position of XCMG Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Newtouch and XCMG Construction.
Diversification Opportunities for Shanghai Newtouch and XCMG Construction
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shanghai and XCMG is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Newtouch Software and XCMG Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCMG Construction and Shanghai Newtouch 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 Newtouch Software are associated (or correlated) with XCMG Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCMG Construction has no effect on the direction of Shanghai Newtouch i.e., Shanghai Newtouch and XCMG Construction go up and down completely randomly.
Pair Corralation between Shanghai Newtouch and XCMG Construction
Assuming the 90 days trading horizon Shanghai Newtouch Software is expected to generate 2.48 times more return on investment than XCMG Construction. However, Shanghai Newtouch is 2.48 times more volatile than XCMG Construction Machinery. It trades about 0.03 of its potential returns per unit of risk. XCMG Construction Machinery is currently generating about 0.02 per unit of risk. If you would invest 1,459 in Shanghai Newtouch Software on October 24, 2024 and sell it today you would earn a total of 18.00 from holding Shanghai Newtouch Software or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Shanghai Newtouch Software vs. XCMG Construction Machinery
Performance |
| Timeline |
| Shanghai Newtouch |
| XCMG Construction |
Shanghai Newtouch and XCMG Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Newtouch and XCMG Construction
The main advantage of trading using opposite Shanghai Newtouch and XCMG Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Newtouch position performs unexpectedly, XCMG 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 XCMG Construction will offset losses from the drop in XCMG Construction's long position.| Shanghai Newtouch vs. PetroChina Co Ltd | Shanghai Newtouch vs. China Mobile Limited | Shanghai Newtouch vs. CNOOC Limited | Shanghai Newtouch vs. Ping An Insurance |
| XCMG Construction vs. China National Software | XCMG Construction vs. Xiamen Goldenhome Co | XCMG Construction vs. Nanjing OLO Home | XCMG Construction vs. Shanghai Newtouch Software |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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