Correlation Between Shanghai Rongtai and Chongqing Brewery
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By analyzing existing cross correlation between Shanghai Rongtai Health and Chongqing Brewery Co, you can compare the effects of market volatilities on Shanghai Rongtai and Chongqing Brewery 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 Rongtai with a short position of Chongqing Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rongtai and Chongqing Brewery.
Diversification Opportunities for Shanghai Rongtai and Chongqing Brewery
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shanghai and Chongqing is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rongtai Health and Chongqing Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Brewery and Shanghai Rongtai 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 Rongtai Health are associated (or correlated) with Chongqing Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Brewery has no effect on the direction of Shanghai Rongtai i.e., Shanghai Rongtai and Chongqing Brewery go up and down completely randomly.
Pair Corralation between Shanghai Rongtai and Chongqing Brewery
Assuming the 90 days trading horizon Shanghai Rongtai is expected to generate 2.77 times less return on investment than Chongqing Brewery. In addition to that, Shanghai Rongtai is 1.4 times more volatile than Chongqing Brewery Co. It trades about 0.04 of its total potential returns per unit of risk. Chongqing Brewery Co is currently generating about 0.14 per unit of volatility. If you would invest 6,063 in Chongqing Brewery Co on September 25, 2024 and sell it today you would earn a total of 354.00 from holding Chongqing Brewery Co or generate 5.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Shanghai Rongtai Health vs. Chongqing Brewery Co
Performance |
Timeline |
Shanghai Rongtai Health |
Chongqing Brewery |
Shanghai Rongtai and Chongqing Brewery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shanghai Rongtai and Chongqing Brewery
The main advantage of trading using opposite Shanghai Rongtai and Chongqing Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Rongtai position performs unexpectedly, Chongqing Brewery 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 Chongqing Brewery will offset losses from the drop in Chongqing Brewery's long position.Shanghai Rongtai vs. PetroChina Co Ltd | Shanghai Rongtai vs. China Mobile Limited | Shanghai Rongtai vs. CNOOC Limited | Shanghai Rongtai vs. Ping An Insurance |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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