Correlation Between Henan Shenhuo and Sinosteel Luonai
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By analyzing existing cross correlation between Henan Shenhuo Coal and Sinosteel Luonai Materials, you can compare the effects of market volatilities on Henan Shenhuo and Sinosteel Luonai 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 Henan Shenhuo with a short position of Sinosteel Luonai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henan Shenhuo and Sinosteel Luonai.
Diversification Opportunities for Henan Shenhuo and Sinosteel Luonai
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Henan and Sinosteel is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Henan Shenhuo Coal and Sinosteel Luonai Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinosteel Luonai Mat and Henan Shenhuo 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 Henan Shenhuo Coal are associated (or correlated) with Sinosteel Luonai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinosteel Luonai Mat has no effect on the direction of Henan Shenhuo i.e., Henan Shenhuo and Sinosteel Luonai go up and down completely randomly.
Pair Corralation between Henan Shenhuo and Sinosteel Luonai
Assuming the 90 days trading horizon Henan Shenhuo Coal is expected to under-perform the Sinosteel Luonai. But the stock apears to be less risky and, when comparing its historical volatility, Henan Shenhuo Coal is 1.23 times less risky than Sinosteel Luonai. The stock trades about -0.12 of its potential returns per unit of risk. The Sinosteel Luonai Materials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 391.00 in Sinosteel Luonai Materials on September 30, 2024 and sell it today you would earn a total of 14.00 from holding Sinosteel Luonai Materials or generate 3.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Henan Shenhuo Coal vs. Sinosteel Luonai Materials
Performance |
Timeline |
Henan Shenhuo Coal |
Sinosteel Luonai Mat |
Henan Shenhuo and Sinosteel Luonai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Henan Shenhuo and Sinosteel Luonai
The main advantage of trading using opposite Henan Shenhuo and Sinosteel Luonai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henan Shenhuo position performs unexpectedly, Sinosteel Luonai 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 Sinosteel Luonai will offset losses from the drop in Sinosteel Luonai's long position.Henan Shenhuo vs. Tongyu Communication | ||
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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