Correlation Between Shenzhen Centralcon and Hunan Investment

Can any of the company-specific risk be diversified away by investing in both Shenzhen Centralcon and Hunan Investment 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 Centralcon and Hunan Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Shenzhen Centralcon and Hunan Investment

0.19

Correlation Coefficient

Shenzhen Centralcon  Hunan Investment

Average diversification

The 3 months correlation between Shenzhen and Hunan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Centralcon Investment and Hunan Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Investment and Shenzhen Centralcon 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 Centralcon Investment are associated (or correlated) with Hunan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Investment has no effect on the direction of Shenzhen Centralcon i.e., Shenzhen Centralcon and Hunan Investment go up and down completely randomly.

Pair Corralation between Shenzhen Centralcon and Hunan Investment

Assuming the 90 days trading horizon Shenzhen Centralcon Investment is expected to generate 1.9 times more return on investment than Hunan Investment. However, Shenzhen Centralcon is 1.9 times more volatile than Hunan Investment Group. It trades about 0.15 of its potential returns per unit of risk. Hunan Investment Group is currently generating about -0.13 per unit of risk. If you would invest  542.00  in Shenzhen Centralcon Investment on December 3, 2024 and sell it today you would earn a total of  170.00  from holding Shenzhen Centralcon Investment or generate 31.37% return on investment over 90 days.

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

Shenzhen Centralcon Investment  vs.  Hunan Investment Group

Shenzhen Centralcon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Centralcon Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Centralcon sustained solid returns over the last few months and may actually be approaching a breakup point.

Hunan Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hunan Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shenzhen Centralcon and Hunan Investment

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

The idea behind Shenzhen Centralcon Investment and Hunan Investment 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..