Correlation Between Sichuan Road and Hunan Investment
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By analyzing existing cross correlation between Sichuan Road Bridge and Hunan Investment Group, you can compare the effects of market volatilities on Sichuan Road and Hunan Investment 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 Sichuan Road with a short position of Hunan Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Road and Hunan Investment.
Diversification Opportunities for Sichuan Road and Hunan Investment
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sichuan and Hunan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Road Bridge and Hunan Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Investment and Sichuan Road 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 Sichuan Road Bridge are associated (or correlated) with Hunan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Investment has no effect on the direction of Sichuan Road i.e., Sichuan Road and Hunan Investment go up and down completely randomly.
Pair Corralation between Sichuan Road and Hunan Investment
Assuming the 90 days trading horizon Sichuan Road is expected to generate 1.44 times less return on investment than Hunan Investment. In addition to that, Sichuan Road is 1.09 times more volatile than Hunan Investment Group. It trades about 0.15 of its total potential returns per unit of risk. Hunan Investment Group is currently generating about 0.23 per unit of volatility. If you would invest 392.00 in Hunan Investment Group on September 15, 2024 and sell it today you would earn a total of 207.00 from holding Hunan Investment Group or generate 52.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sichuan Road Bridge vs. Hunan Investment Group
Performance |
Timeline |
Sichuan Road Bridge |
Hunan Investment |
Sichuan Road and Hunan Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sichuan Road and Hunan Investment
The main advantage of trading using opposite Sichuan Road and Hunan Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Road position performs unexpectedly, Hunan Investment 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 Hunan Investment will offset losses from the drop in Hunan Investment's long position.Sichuan Road vs. Tianjin Capital Environmental | Sichuan Road vs. Ningbo Tech Bank Co | Sichuan Road vs. Sinocat Environmental Technology | Sichuan Road vs. HeNan Splendor Science |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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