Correlation Between Shenzhen Shenbao and Everjoy Health

Can any of the company-specific risk be diversified away by investing in both Shenzhen Shenbao and Everjoy Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shenzhen Shenbao and Everjoy Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen Shenbao Industrial and Everjoy Health Group, you can compare the effects of market volatilities on Shenzhen Shenbao and Everjoy Health 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 Shenzhen Shenbao with a short position of Everjoy Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Shenbao and Everjoy Health.

Diversification Opportunities for Shenzhen Shenbao and Everjoy Health

0.78

Correlation Coefficient

Shenzhen Shenbao  Everjoy Health

Poor diversification

The 3 months correlation between Shenzhen and Everjoy is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Shenbao Industrial and Everjoy Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everjoy Health Group and Shenzhen Shenbao 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 Shenzhen Shenbao Industrial are associated (or correlated) with Everjoy Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everjoy Health Group has no effect on the direction of Shenzhen Shenbao i.e., Shenzhen Shenbao and Everjoy Health go up and down completely randomly.

Pair Corralation between Shenzhen Shenbao and Everjoy Health

Assuming the 90 days trading horizon Shenzhen Shenbao Industrial is expected to generate 0.62 times more return on investment than Everjoy Health. However, Shenzhen Shenbao Industrial is 1.61 times less risky than Everjoy Health. It trades about 0.0 of its potential returns per unit of risk. Everjoy Health Group is currently generating about -0.01 per unit of risk. If you would invest  686.00  in Shenzhen Shenbao Industrial on October 4, 2024 and sell it today you would lose (29.00) from holding Shenzhen Shenbao Industrial or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Shenzhen Shenbao Industrial  vs.  Everjoy Health Group

Shenzhen Shenbao Ind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Shenbao Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shenzhen Shenbao is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Everjoy Health Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everjoy Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Shenzhen Shenbao and Everjoy Health

The main advantage of trading using opposite Shenzhen Shenbao and Everjoy Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Shenbao position performs unexpectedly, Everjoy Health 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 Everjoy Health will offset losses from the drop in Everjoy Health's long position.

The idea behind Shenzhen Shenbao Industrial and Everjoy Health Group 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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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.