Correlation Between Pengxin International and Xiangyang Automobile
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By analyzing existing cross correlation between Pengxin International Mining and Xiangyang Automobile Bearing, you can compare the effects of market volatilities on Pengxin International and Xiangyang Automobile 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 Pengxin International with a short position of Xiangyang Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pengxin International and Xiangyang Automobile.
Diversification Opportunities for Pengxin International and Xiangyang Automobile
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pengxin and Xiangyang is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pengxin International Mining and Xiangyang Automobile Bearing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangyang Automobile and Pengxin International 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 Pengxin International Mining are associated (or correlated) with Xiangyang Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangyang Automobile has no effect on the direction of Pengxin International i.e., Pengxin International and Xiangyang Automobile go up and down completely randomly.
Pair Corralation between Pengxin International and Xiangyang Automobile
Assuming the 90 days trading horizon Pengxin International Mining is expected to generate 0.95 times more return on investment than Xiangyang Automobile. However, Pengxin International Mining is 1.05 times less risky than Xiangyang Automobile. It trades about 0.22 of its potential returns per unit of risk. Xiangyang Automobile Bearing is currently generating about 0.17 per unit of risk. If you would invest 209.00 in Pengxin International Mining on September 7, 2024 and sell it today you would earn a total of 121.00 from holding Pengxin International Mining or generate 57.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Pengxin International Mining vs. Xiangyang Automobile Bearing
Performance |
Timeline |
Pengxin International |
Xiangyang Automobile |
Pengxin International and Xiangyang Automobile Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pengxin International and Xiangyang Automobile
The main advantage of trading using opposite Pengxin International and Xiangyang Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pengxin International position performs unexpectedly, Xiangyang Automobile 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 Xiangyang Automobile will offset losses from the drop in Xiangyang Automobile's long position.The idea behind Pengxin International Mining and Xiangyang Automobile Bearing 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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