Correlation Between Shenzhen Transsion and Tianjin Pengling
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By analyzing existing cross correlation between Shenzhen Transsion Holdings and Tianjin Pengling Rubber, you can compare the effects of market volatilities on Shenzhen Transsion and Tianjin Pengling 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 Shenzhen Transsion with a short position of Tianjin Pengling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Transsion and Tianjin Pengling.
Diversification Opportunities for Shenzhen Transsion and Tianjin Pengling
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Tianjin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Transsion Holdings and Tianjin Pengling Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Pengling Rubber and Shenzhen Transsion 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 Shenzhen Transsion Holdings are associated (or correlated) with Tianjin Pengling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Pengling Rubber has no effect on the direction of Shenzhen Transsion i.e., Shenzhen Transsion and Tianjin Pengling go up and down completely randomly.
Pair Corralation between Shenzhen Transsion and Tianjin Pengling
Assuming the 90 days trading horizon Shenzhen Transsion is expected to generate 1.27 times less return on investment than Tianjin Pengling. In addition to that, Shenzhen Transsion is 1.22 times more volatile than Tianjin Pengling Rubber. It trades about 0.1 of its total potential returns per unit of risk. Tianjin Pengling Rubber is currently generating about 0.15 per unit of volatility. If you would invest 394.00 in Tianjin Pengling Rubber on September 8, 2024 and sell it today you would earn a total of 136.00 from holding Tianjin Pengling Rubber or generate 34.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Shenzhen Transsion Holdings vs. Tianjin Pengling Rubber
Performance |
Timeline |
Shenzhen Transsion |
Tianjin Pengling Rubber |
Shenzhen Transsion and Tianjin Pengling Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shenzhen Transsion and Tianjin Pengling
The main advantage of trading using opposite Shenzhen Transsion and Tianjin Pengling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Transsion position performs unexpectedly, Tianjin Pengling 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 Tianjin Pengling will offset losses from the drop in Tianjin Pengling's long position.The idea behind Shenzhen Transsion Holdings and Tianjin Pengling Rubber 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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