Correlation Between China Mobile and Shijiazhuang Tonhe
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By analyzing existing cross correlation between China Mobile Limited and Shijiazhuang Tonhe Electronics, you can compare the effects of market volatilities on China Mobile and Shijiazhuang Tonhe 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 China Mobile with a short position of Shijiazhuang Tonhe. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and Shijiazhuang Tonhe.
Diversification Opportunities for China Mobile and Shijiazhuang Tonhe
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Shijiazhuang is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile Limited and Shijiazhuang Tonhe Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shijiazhuang Tonhe and China Mobile 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 China Mobile Limited are associated (or correlated) with Shijiazhuang Tonhe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shijiazhuang Tonhe has no effect on the direction of China Mobile i.e., China Mobile and Shijiazhuang Tonhe go up and down completely randomly.
Pair Corralation between China Mobile and Shijiazhuang Tonhe
Assuming the 90 days trading horizon China Mobile is expected to generate 3.16 times less return on investment than Shijiazhuang Tonhe. But when comparing it to its historical volatility, China Mobile Limited is 2.74 times less risky than Shijiazhuang Tonhe. It trades about 0.11 of its potential returns per unit of risk. Shijiazhuang Tonhe Electronics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,335 in Shijiazhuang Tonhe Electronics on September 24, 2024 and sell it today you would earn a total of 382.00 from holding Shijiazhuang Tonhe Electronics or generate 28.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
China Mobile Limited vs. Shijiazhuang Tonhe Electronics
Performance |
Timeline |
China Mobile Limited |
Shijiazhuang Tonhe |
China Mobile and Shijiazhuang Tonhe Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Mobile and Shijiazhuang Tonhe
The main advantage of trading using opposite China Mobile and Shijiazhuang Tonhe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile position performs unexpectedly, Shijiazhuang Tonhe 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 Shijiazhuang Tonhe will offset losses from the drop in Shijiazhuang Tonhe's long position.China Mobile vs. Chengdu Kanghua Biological | China Mobile vs. Beijing Wantai Biological | China Mobile vs. Suzhou Novoprotein Scientific | China Mobile vs. COL Digital Publishing |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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