Correlation Between Shenzhen Centralcon and Industrial Bank

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

Diversification Opportunities for Shenzhen Centralcon and Industrial Bank

-0.08

Correlation Coefficient

Shenzhen Centralcon  Industrial Bank

Good diversification

The 3 months correlation between Shenzhen and Industrial is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Centralcon Investment and Industrial Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Shenzhen Centralcon i.e., Shenzhen Centralcon and Industrial Bank go up and down completely randomly.

Pair Corralation between Shenzhen Centralcon and Industrial Bank

Assuming the 90 days trading horizon Shenzhen Centralcon Investment is expected to under-perform the Industrial Bank. In addition to that, Shenzhen Centralcon is 2.32 times more volatile than Industrial Bank Co. It trades about -0.02 of its total potential returns per unit of risk. Industrial Bank Co is currently generating about 0.03 per unit of volatility. If you would invest  1,696  in Industrial Bank Co on October 4, 2024 and sell it today you would earn a total of  220.00  from holding Industrial Bank Co or generate 12.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Shenzhen Centralcon Investment  vs.  Industrial Bank Co

Shenzhen Centralcon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Centralcon Investment 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.

Industrial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Bank Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Industrial Bank 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 Centralcon and Industrial Bank

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

The idea behind Shenzhen Centralcon Investment and Industrial Bank 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.