Correlation Between Kingclean Electric and Shanghai Construction
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By analyzing existing cross correlation between Kingclean Electric Co and Shanghai Construction Group, you can compare the effects of market volatilities on Kingclean Electric 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 Kingclean Electric with a short position of Shanghai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingclean Electric and Shanghai Construction.
Diversification Opportunities for Kingclean Electric and Shanghai Construction
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kingclean and Shanghai is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kingclean Electric 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 Kingclean Electric 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 Kingclean Electric 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 Kingclean Electric i.e., Kingclean Electric and Shanghai Construction go up and down completely randomly.
Pair Corralation between Kingclean Electric and Shanghai Construction
Assuming the 90 days trading horizon Kingclean Electric is expected to generate 14.47 times less return on investment than Shanghai Construction. But when comparing it to its historical volatility, Kingclean Electric Co is 1.81 times less risky than Shanghai Construction. It trades about 0.01 of its potential returns per unit of risk. 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 | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Kingclean Electric Co vs. Shanghai Construction Group
Performance |
Timeline |
Kingclean Electric |
Shanghai Construction |
Kingclean Electric and Shanghai Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kingclean Electric and Shanghai Construction
The main advantage of trading using opposite Kingclean Electric and Shanghai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingclean Electric 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.The idea behind Kingclean Electric Co and Shanghai Construction Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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