Correlation Between Sichuan Expressway and Jiangsu Expressway
Can any of the company-specific risk be diversified away by investing in both Sichuan Expressway and Jiangsu Expressway at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sichuan Expressway and Jiangsu Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sichuan Expressway and Jiangsu Expressway, you can compare the effects of market volatilities on Sichuan Expressway and Jiangsu Expressway 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 Sichuan Expressway with a short position of Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Expressway and Jiangsu Expressway.
Diversification Opportunities for Sichuan Expressway and Jiangsu Expressway
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sichuan and Jiangsu is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Expressway and Jiangsu Expressway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway and Sichuan Expressway 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 Sichuan Expressway are associated (or correlated) with Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Sichuan Expressway i.e., Sichuan Expressway and Jiangsu Expressway go up and down completely randomly.
Pair Corralation between Sichuan Expressway and Jiangsu Expressway
If you would invest 110.00 in Jiangsu Expressway on October 21, 2024 and sell it today you would earn a total of 3.00 from holding Jiangsu Expressway or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.26% |
| Values | Daily Returns |
Sichuan Expressway vs. Jiangsu Expressway
Performance |
| Timeline |
| Sichuan Expressway |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Jiangsu Expressway |
Sichuan Expressway and Jiangsu Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Expressway and Jiangsu Expressway
The main advantage of trading using opposite Sichuan Expressway and Jiangsu Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Expressway position performs unexpectedly, Jiangsu Expressway 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 Jiangsu Expressway will offset losses from the drop in Jiangsu Expressway's long position.The idea behind Sichuan Expressway and Jiangsu Expressway 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.| Jiangsu Expressway vs. BJs Restaurants | Jiangsu Expressway vs. Vistra Energy Corp | Jiangsu Expressway vs. GE Vernova LLC | Jiangsu Expressway vs. RCI Hospitality Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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