Correlation Between Tongxing Environmental and Jiujiang Shanshui
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By analyzing existing cross correlation between Tongxing Environmental Protection and Jiujiang Shanshui Technology, you can compare the effects of market volatilities on Tongxing Environmental and Jiujiang Shanshui 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 Tongxing Environmental with a short position of Jiujiang Shanshui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongxing Environmental and Jiujiang Shanshui.
Diversification Opportunities for Tongxing Environmental and Jiujiang Shanshui
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tongxing and Jiujiang is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tongxing Environmental Protect and Jiujiang Shanshui Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiujiang Shanshui and Tongxing Environmental 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 Tongxing Environmental Protection are associated (or correlated) with Jiujiang Shanshui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiujiang Shanshui has no effect on the direction of Tongxing Environmental i.e., Tongxing Environmental and Jiujiang Shanshui go up and down completely randomly.
Pair Corralation between Tongxing Environmental and Jiujiang Shanshui
Assuming the 90 days trading horizon Tongxing Environmental is expected to generate 6.57 times less return on investment than Jiujiang Shanshui. But when comparing it to its historical volatility, Tongxing Environmental Protection is 2.68 times less risky than Jiujiang Shanshui. It trades about 0.15 of its potential returns per unit of risk. Jiujiang Shanshui Technology is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,562 in Jiujiang Shanshui Technology on December 10, 2024 and sell it today you would earn a total of 376.00 from holding Jiujiang Shanshui Technology or generate 24.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tongxing Environmental Protect vs. Jiujiang Shanshui Technology
Performance |
Timeline |
Tongxing Environmental |
Jiujiang Shanshui |
Tongxing Environmental and Jiujiang Shanshui Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tongxing Environmental and Jiujiang Shanshui
The main advantage of trading using opposite Tongxing Environmental and Jiujiang Shanshui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongxing Environmental position performs unexpectedly, Jiujiang Shanshui 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 Jiujiang Shanshui will offset losses from the drop in Jiujiang Shanshui's long position.The idea behind Tongxing Environmental Protection and Jiujiang Shanshui Technology 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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