Correlation Between Jilin Chemical and Guangzhou Hongli
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By analyzing existing cross correlation between Jilin Chemical Fibre and Guangzhou Hongli Opto, you can compare the effects of market volatilities on Jilin Chemical and Guangzhou Hongli 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 Jilin Chemical with a short position of Guangzhou Hongli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jilin Chemical and Guangzhou Hongli.
Diversification Opportunities for Jilin Chemical and Guangzhou Hongli
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jilin and Guangzhou is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jilin Chemical Fibre and Guangzhou Hongli Opto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Hongli Opto and Jilin Chemical 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 Jilin Chemical Fibre are associated (or correlated) with Guangzhou Hongli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Hongli Opto has no effect on the direction of Jilin Chemical i.e., Jilin Chemical and Guangzhou Hongli go up and down completely randomly.
Pair Corralation between Jilin Chemical and Guangzhou Hongli
Assuming the 90 days trading horizon Jilin Chemical is expected to generate 1.06 times less return on investment than Guangzhou Hongli. But when comparing it to its historical volatility, Jilin Chemical Fibre is 1.19 times less risky than Guangzhou Hongli. It trades about 0.17 of its potential returns per unit of risk. Guangzhou Hongli Opto is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 571.00 in Guangzhou Hongli Opto on September 22, 2024 and sell it today you would earn a total of 244.00 from holding Guangzhou Hongli Opto or generate 42.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Jilin Chemical Fibre vs. Guangzhou Hongli Opto
Performance |
Timeline |
Jilin Chemical Fibre |
Guangzhou Hongli Opto |
Jilin Chemical and Guangzhou Hongli Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jilin Chemical and Guangzhou Hongli
The main advantage of trading using opposite Jilin Chemical and Guangzhou Hongli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jilin Chemical position performs unexpectedly, Guangzhou Hongli 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 Guangzhou Hongli will offset losses from the drop in Guangzhou Hongli's long position.Jilin Chemical vs. Zijin Mining Group | Jilin Chemical vs. Wanhua Chemical Group | Jilin Chemical vs. Baoshan Iron Steel | Jilin Chemical vs. Shandong Gold Mining |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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