Correlation Between GOLD ROAD and Shanghai Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and Shanghai Pharmaceuticals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GOLD ROAD and Shanghai Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLD ROAD RES and Shanghai Pharmaceuticals Holding, you can compare the effects of market volatilities on GOLD ROAD and Shanghai Pharmaceuticals 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 GOLD ROAD with a short position of Shanghai Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Shanghai Pharmaceuticals.
Diversification Opportunities for GOLD ROAD and Shanghai Pharmaceuticals
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GOLD and Shanghai is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Shanghai Pharmaceuticals Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Pharmaceuticals and GOLD ROAD 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 GOLD ROAD RES are associated (or correlated) with Shanghai Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Pharmaceuticals has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and Shanghai Pharmaceuticals go up and down completely randomly.
Pair Corralation between GOLD ROAD and Shanghai Pharmaceuticals
Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 1.38 times more return on investment than Shanghai Pharmaceuticals. However, GOLD ROAD is 1.38 times more volatile than Shanghai Pharmaceuticals Holding. It trades about 0.18 of its potential returns per unit of risk. Shanghai Pharmaceuticals Holding is currently generating about 0.06 per unit of risk. If you would invest 117.00 in GOLD ROAD RES on October 24, 2024 and sell it today you would earn a total of 32.00 from holding GOLD ROAD RES or generate 27.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
GOLD ROAD RES vs. Shanghai Pharmaceuticals Holdi
Performance |
Timeline |
GOLD ROAD RES |
Shanghai Pharmaceuticals |
GOLD ROAD and Shanghai Pharmaceuticals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GOLD ROAD and Shanghai Pharmaceuticals
The main advantage of trading using opposite GOLD ROAD and Shanghai Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD position performs unexpectedly, Shanghai Pharmaceuticals 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 Pharmaceuticals will offset losses from the drop in Shanghai Pharmaceuticals' long position.The idea behind GOLD ROAD RES and Shanghai Pharmaceuticals Holding 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.Shanghai Pharmaceuticals vs. Vienna Insurance Group | Shanghai Pharmaceuticals vs. Grupo Carso SAB | Shanghai Pharmaceuticals vs. Reinsurance Group of | Shanghai Pharmaceuticals vs. Singapore Reinsurance |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |