Correlation Between THRACE PLASTICS and Yangzijiang Shipbuilding
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS and Yangzijiang Shipbuilding 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 THRACE PLASTICS and Yangzijiang Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and Yangzijiang Shipbuilding, you can compare the effects of market volatilities on THRACE PLASTICS and Yangzijiang Shipbuilding 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 THRACE PLASTICS with a short position of Yangzijiang Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and Yangzijiang Shipbuilding.
Diversification Opportunities for THRACE PLASTICS and Yangzijiang Shipbuilding
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THRACE and Yangzijiang is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and Yangzijiang Shipbuilding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yangzijiang Shipbuilding and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with Yangzijiang Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yangzijiang Shipbuilding has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and Yangzijiang Shipbuilding go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and Yangzijiang Shipbuilding
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 3.16 times less return on investment than Yangzijiang Shipbuilding. But when comparing it to its historical volatility, THRACE PLASTICS is 1.68 times less risky than Yangzijiang Shipbuilding. It trades about 0.26 of its potential returns per unit of risk. Yangzijiang Shipbuilding is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 182.00 in Yangzijiang Shipbuilding on October 9, 2024 and sell it today you would earn a total of 20.00 from holding Yangzijiang Shipbuilding or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THRACE PLASTICS vs. Yangzijiang Shipbuilding
Performance |
| Timeline |
| THRACE PLASTICS |
| Yangzijiang Shipbuilding |
THRACE PLASTICS and Yangzijiang Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and Yangzijiang Shipbuilding
The main advantage of trading using opposite THRACE PLASTICS and Yangzijiang Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS position performs unexpectedly, Yangzijiang Shipbuilding 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 Yangzijiang Shipbuilding will offset losses from the drop in Yangzijiang Shipbuilding's long position.| THRACE PLASTICS vs. Fortescue Metals Group | THRACE PLASTICS vs. ANTA SPORTS PRODUCT | THRACE PLASTICS vs. LG Electronics | THRACE PLASTICS vs. FIREWEED METALS P |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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