Correlation Between Shanghai Pudong and Wankai New
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By analyzing existing cross correlation between Shanghai Pudong Development and Wankai New Materials, you can compare the effects of market volatilities on Shanghai Pudong and Wankai 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 Shanghai Pudong with a short position of Wankai New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Pudong and Wankai New.
Diversification Opportunities for Shanghai Pudong and Wankai New
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Wankai is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Pudong Development and Wankai New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wankai New Materials and Shanghai Pudong 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 Shanghai Pudong Development are associated (or correlated) with Wankai New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wankai New Materials has no effect on the direction of Shanghai Pudong i.e., Shanghai Pudong and Wankai New go up and down completely randomly.
Pair Corralation between Shanghai Pudong and Wankai New
Assuming the 90 days trading horizon Shanghai Pudong Development is expected to under-perform the Wankai New. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Pudong Development is 1.34 times less risky than Wankai New. The stock trades about -0.1 of its potential returns per unit of risk. The Wankai New Materials is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,134 in Wankai New Materials on September 23, 2024 and sell it today you would lose (61.00) from holding Wankai New Materials or give up 5.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Shanghai Pudong Development vs. Wankai New Materials
Performance |
Timeline |
Shanghai Pudong Deve |
Wankai New Materials |
Shanghai Pudong and Wankai New Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shanghai Pudong and Wankai New
The main advantage of trading using opposite Shanghai Pudong and Wankai New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Pudong position performs unexpectedly, Wankai 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 Wankai New will offset losses from the drop in Wankai New's long position.Shanghai Pudong vs. Kweichow Moutai Co | Shanghai Pudong vs. Contemporary Amperex Technology | Shanghai Pudong vs. G bits Network Technology | Shanghai Pudong vs. BYD Co Ltd |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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