Correlation Between Shanghai Lingyun and Guangzhou Zhujiang
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By analyzing existing cross correlation between Shanghai Lingyun Industries and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on Shanghai Lingyun and Guangzhou Zhujiang 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 Lingyun with a short position of Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Lingyun and Guangzhou Zhujiang.
Diversification Opportunities for Shanghai Lingyun and Guangzhou Zhujiang
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Guangzhou is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Lingyun Industries and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang and Shanghai Lingyun 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 Lingyun Industries are associated (or correlated) with Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Shanghai Lingyun i.e., Shanghai Lingyun and Guangzhou Zhujiang go up and down completely randomly.
Pair Corralation between Shanghai Lingyun and Guangzhou Zhujiang
Assuming the 90 days trading horizon Shanghai Lingyun Industries is expected to generate 2.06 times more return on investment than Guangzhou Zhujiang. However, Shanghai Lingyun is 2.06 times more volatile than Guangzhou Zhujiang Brewery. It trades about 0.15 of its potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about 0.05 per unit of risk. If you would invest 26.00 in Shanghai Lingyun Industries on August 31, 2024 and sell it today you would earn a total of 11.00 from holding Shanghai Lingyun Industries or generate 42.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Shanghai Lingyun Industries vs. Guangzhou Zhujiang Brewery
Performance |
Timeline |
Shanghai Lingyun Ind |
Guangzhou Zhujiang |
Shanghai Lingyun and Guangzhou Zhujiang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shanghai Lingyun and Guangzhou Zhujiang
The main advantage of trading using opposite Shanghai Lingyun and Guangzhou Zhujiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Lingyun position performs unexpectedly, Guangzhou Zhujiang 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 Guangzhou Zhujiang will offset losses from the drop in Guangzhou Zhujiang's long position.Shanghai Lingyun vs. Sportsoul Co Ltd | Shanghai Lingyun vs. Threes Company Media | Shanghai Lingyun vs. Zhejiang Daily Media | Shanghai Lingyun vs. Shanghai Xinhua Media |
Guangzhou Zhujiang vs. Lutian Machinery Co | Guangzhou Zhujiang vs. PetroChina Co Ltd | Guangzhou Zhujiang vs. Bank of China | Guangzhou Zhujiang vs. Gansu Jiu Steel |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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