Correlation Between China Life and Shandong Sanyuan
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By analyzing existing cross correlation between China Life Insurance and Shandong Sanyuan Biotechnology, you can compare the effects of market volatilities on China Life and Shandong Sanyuan 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 China Life with a short position of Shandong Sanyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and Shandong Sanyuan.
Diversification Opportunities for China Life and Shandong Sanyuan
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Shandong is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Shandong Sanyuan Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sanyuan Bio and China Life 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 China Life Insurance are associated (or correlated) with Shandong Sanyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sanyuan Bio has no effect on the direction of China Life i.e., China Life and Shandong Sanyuan go up and down completely randomly.
Pair Corralation between China Life and Shandong Sanyuan
Assuming the 90 days trading horizon China Life Insurance is expected to generate 0.88 times more return on investment than Shandong Sanyuan. However, China Life Insurance is 1.13 times less risky than Shandong Sanyuan. It trades about 0.09 of its potential returns per unit of risk. Shandong Sanyuan Biotechnology is currently generating about -0.01 per unit of risk. If you would invest 2,586 in China Life Insurance on October 7, 2024 and sell it today you would earn a total of 1,346 from holding China Life Insurance or generate 52.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
China Life Insurance vs. Shandong Sanyuan Biotechnology
Performance |
Timeline |
China Life Insurance |
Shandong Sanyuan Bio |
China Life and Shandong Sanyuan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Life and Shandong Sanyuan
The main advantage of trading using opposite China Life and Shandong Sanyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, Shandong Sanyuan 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 Shandong Sanyuan will offset losses from the drop in Shandong Sanyuan's long position.China Life vs. Qingdao Choho Industrial | China Life vs. Southchip Semiconductor Technology | China Life vs. Xinjiang Baodi Mining | China Life vs. Everdisplay Optronics Shanghai |
Shandong Sanyuan vs. Sichuan Jinshi Technology | Shandong Sanyuan vs. Liaoning Dingjide Petrochemical | Shandong Sanyuan vs. Wuxi Chemical Equipment | Shandong Sanyuan vs. Nanjing Putian Telecommunications |
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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