Correlation Between Shandong Mining and Easyhome New

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

By analyzing existing cross correlation between Shandong Mining Machinery and Easyhome New Retail, you can compare the effects of market volatilities on Shandong Mining and Easyhome New 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 Mining with a short position of Easyhome New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Mining and Easyhome New.

Diversification Opportunities for Shandong Mining and Easyhome New

0.69

Correlation Coefficient

Shandong Mining  Easyhome New

Poor diversification

The 3 months correlation between Shandong and Easyhome is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Mining Machinery and Easyhome New Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easyhome New Retail and Shandong Mining 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 Mining Machinery are associated (or correlated) with Easyhome New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easyhome New Retail has no effect on the direction of Shandong Mining i.e., Shandong Mining and Easyhome New go up and down completely randomly.

Pair Corralation between Shandong Mining and Easyhome New

Assuming the 90 days trading horizon Shandong Mining Machinery is expected to generate 1.18 times more return on investment than Easyhome New. However, Shandong Mining is 1.18 times more volatile than Easyhome New Retail. It trades about 0.1 of its potential returns per unit of risk. Easyhome New Retail is currently generating about 0.11 per unit of risk. If you would invest  274.00  in Shandong Mining Machinery on October 4, 2024 and sell it today you would earn a total of  75.00  from holding Shandong Mining Machinery or generate 27.37% return on investment over 90 days.

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

Shandong Mining Machinery  vs.  Easyhome New Retail

Shandong Mining Machinery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Mining Machinery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Easyhome New Retail

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Easyhome New Retail are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Easyhome New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shandong Mining and Easyhome New

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

The idea behind Shandong Mining Machinery and Easyhome New Retail 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.