Correlation Between Shenzhen Centralcon and Grandblue Environment

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

Diversification Opportunities for Shenzhen Centralcon and Grandblue Environment

0.76

Correlation Coefficient

Shenzhen Centralcon  Grandblue Environment

Poor diversification

The 3 months correlation between Shenzhen and Grandblue is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Centralcon Investment and Grandblue Environment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandblue Environment 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 Grandblue Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandblue Environment has no effect on the direction of Shenzhen Centralcon i.e., Shenzhen Centralcon and Grandblue Environment go up and down completely randomly.

Pair Corralation between Shenzhen Centralcon and Grandblue Environment

Assuming the 90 days trading horizon Shenzhen Centralcon Investment is expected to under-perform the Grandblue Environment. In addition to that, Shenzhen Centralcon is 2.31 times more volatile than Grandblue Environment Co. It trades about -0.01 of its total potential returns per unit of risk. Grandblue Environment Co is currently generating about 0.05 per unit of volatility. If you would invest  1,819  in Grandblue Environment Co on September 26, 2024 and sell it today you would earn a total of  525.00  from holding Grandblue Environment Co or generate 28.86% return on investment over 90 days.

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

Shenzhen Centralcon Investment  vs.  Grandblue Environment Co

Shenzhen Centralcon

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Centralcon Investment are ranked lower than 8 (%) 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.

Grandblue Environment

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Shenzhen Centralcon and Grandblue Environment

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

The idea behind Shenzhen Centralcon Investment and Grandblue Environment Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.