Correlation Between Tongyu Communication and XinJiang GuoTong
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By analyzing existing cross correlation between Tongyu Communication and XinJiang GuoTong Pipeline, you can compare the effects of market volatilities on Tongyu Communication and XinJiang GuoTong 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 Tongyu Communication with a short position of XinJiang GuoTong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongyu Communication and XinJiang GuoTong.
Diversification Opportunities for Tongyu Communication and XinJiang GuoTong
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tongyu and XinJiang is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tongyu Communication and XinJiang GuoTong Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XinJiang GuoTong Pipeline and Tongyu Communication 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 Tongyu Communication are associated (or correlated) with XinJiang GuoTong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XinJiang GuoTong Pipeline has no effect on the direction of Tongyu Communication i.e., Tongyu Communication and XinJiang GuoTong go up and down completely randomly.
Pair Corralation between Tongyu Communication and XinJiang GuoTong
Assuming the 90 days trading horizon Tongyu Communication is expected to generate 1.2 times more return on investment than XinJiang GuoTong. However, Tongyu Communication is 1.2 times more volatile than XinJiang GuoTong Pipeline. It trades about 0.22 of its potential returns per unit of risk. XinJiang GuoTong Pipeline is currently generating about 0.2 per unit of risk. If you would invest 1,025 in Tongyu Communication on September 6, 2024 and sell it today you would earn a total of 607.00 from holding Tongyu Communication or generate 59.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Tongyu Communication vs. XinJiang GuoTong Pipeline
Performance |
Timeline |
Tongyu Communication |
XinJiang GuoTong Pipeline |
Tongyu Communication and XinJiang GuoTong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tongyu Communication and XinJiang GuoTong
The main advantage of trading using opposite Tongyu Communication and XinJiang GuoTong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongyu Communication position performs unexpectedly, XinJiang GuoTong 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 XinJiang GuoTong will offset losses from the drop in XinJiang GuoTong's long position.The idea behind Tongyu Communication and XinJiang GuoTong Pipeline 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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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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