Correlation Between Shenzhen Shenbao and Saurer Intelligent

Can any of the company-specific risk be diversified away by investing in both Shenzhen Shenbao and Saurer Intelligent 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 Saurer Intelligent 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 Saurer Intelligent Technology, you can compare the effects of market volatilities on Shenzhen Shenbao and Saurer Intelligent 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 Saurer Intelligent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Shenbao and Saurer Intelligent.

Diversification Opportunities for Shenzhen Shenbao and Saurer Intelligent

0.66

Correlation Coefficient

Shenzhen Shenbao  Saurer Intelligent

Poor diversification

The 3 months correlation between Shenzhen and Saurer is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Shenbao Industrial and Saurer Intelligent Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saurer Intelligent 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 Saurer Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saurer Intelligent has no effect on the direction of Shenzhen Shenbao i.e., Shenzhen Shenbao and Saurer Intelligent go up and down completely randomly.

Pair Corralation between Shenzhen Shenbao and Saurer Intelligent

Assuming the 90 days trading horizon Shenzhen Shenbao is expected to generate 3.2 times less return on investment than Saurer Intelligent. But when comparing it to its historical volatility, Shenzhen Shenbao Industrial is 3.21 times less risky than Saurer Intelligent. It trades about 0.0 of its potential returns per unit of risk. Saurer Intelligent Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  248.00  in Saurer Intelligent Technology on December 26, 2024 and sell it today you would lose (9.00) from holding Saurer Intelligent Technology or give up 3.63% 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.  Saurer Intelligent Technology

Shenzhen Shenbao Ind

Risk-Adjusted Performance

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.

Saurer Intelligent

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Shenzhen Shenbao and Saurer Intelligent

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

The idea behind Shenzhen Shenbao Industrial and Saurer Intelligent Technology 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.