Correlation Between Western Mining and Shanghai Construction
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By analyzing existing cross correlation between Western Mining Co and Shanghai Construction Group, you can compare the effects of market volatilities on Western Mining and Shanghai 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 Western Mining with a short position of Shanghai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Mining and Shanghai Construction.
Diversification Opportunities for Western Mining and Shanghai Construction
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Shanghai is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Western Mining Co and Shanghai Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Construction and Western Mining 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 Western Mining Co are associated (or correlated) with Shanghai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Construction has no effect on the direction of Western Mining i.e., Western Mining and Shanghai Construction go up and down completely randomly.
Pair Corralation between Western Mining and Shanghai Construction
Assuming the 90 days trading horizon Western Mining Co is expected to under-perform the Shanghai Construction. But the stock apears to be less risky and, when comparing its historical volatility, Western Mining Co is 1.59 times less risky than Shanghai Construction. The stock trades about -0.08 of its potential returns per unit of risk. The Shanghai Construction Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 257.00 in Shanghai Construction Group on September 25, 2024 and sell it today you would earn a total of 13.00 from holding Shanghai Construction Group or generate 5.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Western Mining Co vs. Shanghai Construction Group
Performance |
Timeline |
Western Mining |
Shanghai Construction |
Western Mining and Shanghai Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Mining and Shanghai Construction
The main advantage of trading using opposite Western Mining and Shanghai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Mining position performs unexpectedly, Shanghai 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 Shanghai Construction will offset losses from the drop in Shanghai Construction's long position.Western Mining vs. Zijin Mining Group | Western Mining vs. Wanhua Chemical Group | Western Mining vs. Baoshan Iron Steel | Western Mining vs. Shandong Gold Mining |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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