Correlation Between Shanghai Rendu and Changjiang Jinggong
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By analyzing existing cross correlation between Shanghai Rendu Biotechnology and Changjiang Jinggong Steel, you can compare the effects of market volatilities on Shanghai Rendu and Changjiang Jinggong 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 Shanghai Rendu with a short position of Changjiang Jinggong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rendu and Changjiang Jinggong.
Diversification Opportunities for Shanghai Rendu and Changjiang Jinggong
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shanghai and Changjiang is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rendu Biotechnology and Changjiang Jinggong Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changjiang Jinggong Steel and Shanghai Rendu 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 Shanghai Rendu Biotechnology are associated (or correlated) with Changjiang Jinggong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changjiang Jinggong Steel has no effect on the direction of Shanghai Rendu i.e., Shanghai Rendu and Changjiang Jinggong go up and down completely randomly.
Pair Corralation between Shanghai Rendu and Changjiang Jinggong
Assuming the 90 days trading horizon Shanghai Rendu Biotechnology is expected to generate 2.0 times more return on investment than Changjiang Jinggong. However, Shanghai Rendu is 2.0 times more volatile than Changjiang Jinggong Steel. It trades about 0.22 of its potential returns per unit of risk. Changjiang Jinggong Steel is currently generating about 0.26 per unit of risk. If you would invest 2,428 in Shanghai Rendu Biotechnology on September 11, 2024 and sell it today you would earn a total of 1,753 from holding Shanghai Rendu Biotechnology or generate 72.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Shanghai Rendu Biotechnology vs. Changjiang Jinggong Steel
Performance |
Timeline |
Shanghai Rendu Biote |
Changjiang Jinggong Steel |
Shanghai Rendu and Changjiang Jinggong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shanghai Rendu and Changjiang Jinggong
The main advantage of trading using opposite Shanghai Rendu and Changjiang Jinggong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Rendu position performs unexpectedly, Changjiang Jinggong 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 Changjiang Jinggong will offset losses from the drop in Changjiang Jinggong's long position.Shanghai Rendu vs. PetroChina Co Ltd | Shanghai Rendu vs. China Mobile Limited | Shanghai Rendu vs. CNOOC Limited | Shanghai Rendu vs. Ping An Insurance |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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