Correlation Between Xinjiang Communications and Shantui Construction
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By analyzing existing cross correlation between Xinjiang Communications Construction and Shantui Construction Machinery, you can compare the effects of market volatilities on Xinjiang Communications and Shantui Construction 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 Xinjiang Communications with a short position of Shantui Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Communications and Shantui Construction.
Diversification Opportunities for Xinjiang Communications and Shantui Construction
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xinjiang and Shantui is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Communications Constr and Shantui Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shantui Construction and Xinjiang Communications 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 Xinjiang Communications Construction are associated (or correlated) with Shantui Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shantui Construction has no effect on the direction of Xinjiang Communications i.e., Xinjiang Communications and Shantui Construction go up and down completely randomly.
Pair Corralation between Xinjiang Communications and Shantui Construction
Assuming the 90 days trading horizon Xinjiang Communications is expected to generate 7.8 times less return on investment than Shantui Construction. In addition to that, Xinjiang Communications is 1.1 times more volatile than Shantui Construction Machinery. It trades about 0.01 of its total potential returns per unit of risk. Shantui Construction Machinery is currently generating about 0.08 per unit of volatility. If you would invest 408.00 in Shantui Construction Machinery on October 4, 2024 and sell it today you would earn a total of 562.00 from holding Shantui Construction Machinery or generate 137.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Xinjiang Communications Constr vs. Shantui Construction Machinery
Performance |
Timeline |
Xinjiang Communications |
Shantui Construction |
Xinjiang Communications and Shantui Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xinjiang Communications and Shantui Construction
The main advantage of trading using opposite Xinjiang Communications and Shantui Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Communications position performs unexpectedly, Shantui Construction 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 Shantui Construction will offset losses from the drop in Shantui Construction's long position.The idea behind Xinjiang Communications Construction and Shantui Construction Machinery 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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