Correlation Between Shanghai Ziyan and New Trend
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By analyzing existing cross correlation between Shanghai Ziyan Foods and New Trend International, you can compare the effects of market volatilities on Shanghai Ziyan and New Trend 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 Shanghai Ziyan with a short position of New Trend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Ziyan and New Trend.
Diversification Opportunities for Shanghai Ziyan and New Trend
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and New is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Ziyan Foods and New Trend International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Trend International and Shanghai Ziyan 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 Shanghai Ziyan Foods are associated (or correlated) with New Trend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Trend International has no effect on the direction of Shanghai Ziyan i.e., Shanghai Ziyan and New Trend go up and down completely randomly.
Pair Corralation between Shanghai Ziyan and New Trend
Assuming the 90 days trading horizon Shanghai Ziyan is expected to generate 1.62 times less return on investment than New Trend. But when comparing it to its historical volatility, Shanghai Ziyan Foods is 1.5 times less risky than New Trend. It trades about 0.09 of its potential returns per unit of risk. New Trend International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 956.00 in New Trend International on September 25, 2024 and sell it today you would earn a total of 240.00 from holding New Trend International or generate 25.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.33% |
Values | Daily Returns |
Shanghai Ziyan Foods vs. New Trend International
Performance |
Timeline |
Shanghai Ziyan Foods |
New Trend International |
Shanghai Ziyan and New Trend Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shanghai Ziyan and New Trend
The main advantage of trading using opposite Shanghai Ziyan and New Trend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Ziyan position performs unexpectedly, New Trend 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 New Trend will offset losses from the drop in New Trend's long position.Shanghai Ziyan vs. Bank of China | Shanghai Ziyan vs. Kweichow Moutai Co | Shanghai Ziyan vs. PetroChina Co Ltd | Shanghai Ziyan vs. Bank of Communications |
New Trend vs. Gan Yuan Foods | New Trend vs. Sichuan Teway Food | New Trend vs. Juewei Food Co | New Trend vs. Shanghai Ziyan Foods |
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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