Correlation Between Guangdong Wens and Xinke Material
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By analyzing existing cross correlation between Guangdong Wens Foodstuff and Xinke Material, you can compare the effects of market volatilities on Guangdong Wens and Xinke Material 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 Guangdong Wens with a short position of Xinke Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Wens and Xinke Material.
Diversification Opportunities for Guangdong Wens and Xinke Material
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangdong and Xinke is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Wens Foodstuff and Xinke Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinke Material and Guangdong Wens 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 Guangdong Wens Foodstuff are associated (or correlated) with Xinke Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinke Material has no effect on the direction of Guangdong Wens i.e., Guangdong Wens and Xinke Material go up and down completely randomly.
Pair Corralation between Guangdong Wens and Xinke Material
Assuming the 90 days trading horizon Guangdong Wens is expected to generate 4.33 times less return on investment than Xinke Material. But when comparing it to its historical volatility, Guangdong Wens Foodstuff is 1.0 times less risky than Xinke Material. It trades about 0.06 of its potential returns per unit of risk. Xinke Material is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 170.00 in Xinke Material on September 12, 2024 and sell it today you would earn a total of 103.00 from holding Xinke Material or generate 60.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Guangdong Wens Foodstuff vs. Xinke Material
Performance |
Timeline |
Guangdong Wens Foodstuff |
Xinke Material |
Guangdong Wens and Xinke Material Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guangdong Wens and Xinke Material
The main advantage of trading using opposite Guangdong Wens and Xinke Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Wens position performs unexpectedly, Xinke Material 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 Xinke Material will offset losses from the drop in Xinke Material's long position.Guangdong Wens vs. China Petroleum Chemical | Guangdong Wens vs. PetroChina Co Ltd | Guangdong Wens vs. China State Construction | Guangdong Wens vs. China Railway Group |
Xinke Material vs. Zijin Mining Group | Xinke Material vs. Wanhua Chemical Group | Xinke Material vs. Baoshan Iron Steel | Xinke Material vs. Rongsheng Petrochemical Co |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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