Correlation Between Shandong and Heilongjiang Publishing

Can any of the company-specific risk be diversified away by investing in both Shandong and Heilongjiang Publishing 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 Shandong and Heilongjiang Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shandong Hi Speed RoadBridge and Heilongjiang Publishing Media, you can compare the effects of market volatilities on Shandong and Heilongjiang Publishing 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 Shandong with a short position of Heilongjiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong and Heilongjiang Publishing.

Diversification Opportunities for Shandong and Heilongjiang Publishing

0.66

Correlation Coefficient

Shandong  Heilongjiang Publishing

Poor diversification

The 3 months correlation between Shandong and Heilongjiang is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hi Speed RoadBridge and Heilongjiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heilongjiang Publishing and Shandong 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 Shandong Hi Speed RoadBridge are associated (or correlated) with Heilongjiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heilongjiang Publishing has no effect on the direction of Shandong i.e., Shandong and Heilongjiang Publishing go up and down completely randomly.

Pair Corralation between Shandong and Heilongjiang Publishing

Assuming the 90 days trading horizon Shandong is expected to generate 1.12 times less return on investment than Heilongjiang Publishing. But when comparing it to its historical volatility, Shandong Hi Speed RoadBridge is 1.41 times less risky than Heilongjiang Publishing. It trades about 0.06 of its potential returns per unit of risk. Heilongjiang Publishing Media is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,402  in Heilongjiang Publishing Media on September 27, 2024 and sell it today you would earn a total of  98.00  from holding Heilongjiang Publishing Media or generate 6.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Shandong Hi Speed RoadBridge  vs.  Heilongjiang Publishing Media

Shandong Hi Speed

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Hi Speed RoadBridge are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Heilongjiang Publishing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Heilongjiang Publishing Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heilongjiang Publishing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shandong and Heilongjiang Publishing

The main advantage of trading using opposite Shandong and Heilongjiang Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong position performs unexpectedly, Heilongjiang Publishing 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 Heilongjiang Publishing will offset losses from the drop in Heilongjiang Publishing's long position.

The idea behind Shandong Hi Speed RoadBridge and Heilongjiang Publishing Media 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.