Correlation Between Shenzhen Centralcon and Zhangjiagang Freetrade

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

Diversification Opportunities for Shenzhen Centralcon and Zhangjiagang Freetrade

-0.26

Correlation Coefficient

Shenzhen Centralcon  Zhangjiagang Freetrade

Very good diversification

The 3 months correlation between Shenzhen and Zhangjiagang is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Centralcon Investment and Zhangjiagang Freetrade Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhangjiagang Freetrade 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 Zhangjiagang Freetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhangjiagang Freetrade has no effect on the direction of Shenzhen Centralcon i.e., Shenzhen Centralcon and Zhangjiagang Freetrade go up and down completely randomly.

Pair Corralation between Shenzhen Centralcon and Zhangjiagang Freetrade

Assuming the 90 days trading horizon Shenzhen Centralcon Investment is expected to generate 2.59 times more return on investment than Zhangjiagang Freetrade. However, Shenzhen Centralcon is 2.59 times more volatile than Zhangjiagang Freetrade Science. It trades about 0.17 of its potential returns per unit of risk. Zhangjiagang Freetrade Science is currently generating about -0.08 per unit of risk. If you would invest  458.00  in Shenzhen Centralcon Investment on December 29, 2024 and sell it today you would earn a total of  173.00  from holding Shenzhen Centralcon Investment or generate 37.77% return on investment over 90 days.

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

Shenzhen Centralcon Investment  vs.  Zhangjiagang Freetrade Science

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 13 (%) 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.

Zhangjiagang Freetrade

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhangjiagang Freetrade Science 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 Centralcon and Zhangjiagang Freetrade

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

The idea behind Shenzhen Centralcon Investment and Zhangjiagang Freetrade Science 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 Anywhere module to track or share privately all of your investments from the convenience of any device.