Correlation Between Shenzhen Mindray and Beijing HuaYuanYiTong
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By analyzing existing cross correlation between Shenzhen Mindray Bio Medical and Beijing HuaYuanYiTong Thermal, you can compare the effects of market volatilities on Shenzhen Mindray and Beijing HuaYuanYiTong 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 Shenzhen Mindray with a short position of Beijing HuaYuanYiTong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Mindray and Beijing HuaYuanYiTong.
Diversification Opportunities for Shenzhen Mindray and Beijing HuaYuanYiTong
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Beijing is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Mindray Bio Medical and Beijing HuaYuanYiTong Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing HuaYuanYiTong and Shenzhen Mindray 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 Shenzhen Mindray Bio Medical are associated (or correlated) with Beijing HuaYuanYiTong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing HuaYuanYiTong has no effect on the direction of Shenzhen Mindray i.e., Shenzhen Mindray and Beijing HuaYuanYiTong go up and down completely randomly.
Pair Corralation between Shenzhen Mindray and Beijing HuaYuanYiTong
Assuming the 90 days trading horizon Shenzhen Mindray Bio Medical is expected to under-perform the Beijing HuaYuanYiTong. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Mindray Bio Medical is 1.64 times less risky than Beijing HuaYuanYiTong. The stock trades about -0.13 of its potential returns per unit of risk. The Beijing HuaYuanYiTong Thermal is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,110 in Beijing HuaYuanYiTong Thermal on October 22, 2024 and sell it today you would lose (153.00) from holding Beijing HuaYuanYiTong Thermal or give up 13.78% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Shenzhen Mindray Bio Medical vs. Beijing HuaYuanYiTong Thermal
Performance |
Timeline |
Shenzhen Mindray Bio |
Beijing HuaYuanYiTong |
Shenzhen Mindray and Beijing HuaYuanYiTong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shenzhen Mindray and Beijing HuaYuanYiTong
The main advantage of trading using opposite Shenzhen Mindray and Beijing HuaYuanYiTong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Mindray position performs unexpectedly, Beijing HuaYuanYiTong 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 Beijing HuaYuanYiTong will offset losses from the drop in Beijing HuaYuanYiTong's long position.Shenzhen Mindray vs. Xinhua Winshare Publishing | Shenzhen Mindray vs. Zhejiang Publishing Media | Shenzhen Mindray vs. Integrated Electronic Systems | Shenzhen Mindray vs. Guangdong Ellington Electronics |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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