Correlation Between Nasdaq and Sinotrans
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By analyzing existing cross correlation between Nasdaq Inc and Sinotrans Ltd Class, you can compare the effects of market volatilities on Nasdaq and Sinotrans 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 Nasdaq with a short position of Sinotrans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Sinotrans.
Diversification Opportunities for Nasdaq and Sinotrans
Significant diversification
The 3 months correlation between Nasdaq and Sinotrans is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Sinotrans Ltd Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinotrans Class and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Sinotrans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinotrans Class has no effect on the direction of Nasdaq i.e., Nasdaq and Sinotrans go up and down completely randomly.
Pair Corralation between Nasdaq and Sinotrans
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.9 times more return on investment than Sinotrans. However, Nasdaq Inc is 1.12 times less risky than Sinotrans. It trades about 0.07 of its potential returns per unit of risk. Sinotrans Ltd Class is currently generating about -0.03 per unit of risk. If you would invest 7,281 in Nasdaq Inc on October 15, 2024 and sell it today you would earn a total of 337.00 from holding Nasdaq Inc or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Nasdaq Inc vs. Sinotrans Ltd Class
Performance |
| Timeline |
| Nasdaq Inc |
| Sinotrans Class |
Nasdaq and Sinotrans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Sinotrans
The main advantage of trading using opposite Nasdaq and Sinotrans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Sinotrans 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 Sinotrans will offset losses from the drop in Sinotrans' long position.The idea behind Nasdaq Inc and Sinotrans Ltd Class 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.| Sinotrans vs. Nanjing Putian Telecommunications | Sinotrans vs. Guangxi Wuzhou Communications | Sinotrans vs. China Mobile Limited | Sinotrans vs. China National 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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