Correlation Between China Satellite and Shandong Mining
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By analyzing existing cross correlation between China Satellite Communications and Shandong Mining Machinery, you can compare the effects of market volatilities on China Satellite and Shandong Mining 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 Satellite with a short position of Shandong Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Satellite and Shandong Mining.
Diversification Opportunities for China Satellite and Shandong Mining
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Shandong is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding China Satellite Communications and Shandong Mining Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Mining Machinery and China Satellite 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 Satellite Communications are associated (or correlated) with Shandong Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Mining Machinery has no effect on the direction of China Satellite i.e., China Satellite and Shandong Mining go up and down completely randomly.
Pair Corralation between China Satellite and Shandong Mining
Assuming the 90 days trading horizon China Satellite is expected to generate 1.55 times less return on investment than Shandong Mining. But when comparing it to its historical volatility, China Satellite Communications is 1.14 times less risky than Shandong Mining. It trades about 0.21 of its potential returns per unit of risk. Shandong Mining Machinery is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 207.00 in Shandong Mining Machinery on September 14, 2024 and sell it today you would earn a total of 250.00 from holding Shandong Mining Machinery or generate 120.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
China Satellite Communications vs. Shandong Mining Machinery
Performance |
Timeline |
China Satellite Comm |
Shandong Mining Machinery |
China Satellite and Shandong Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Satellite and Shandong Mining
The main advantage of trading using opposite China Satellite and Shandong Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Satellite position performs unexpectedly, Shandong Mining 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 Shandong Mining will offset losses from the drop in Shandong Mining's long position.China Satellite vs. Industrial and Commercial | ||
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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