Correlation Between Shenzhen Centralcon and Jiangsu Flowers

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

Diversification Opportunities for Shenzhen Centralcon and Jiangsu Flowers

0.34

Correlation Coefficient

Shenzhen Centralcon  Jiangsu Flowers

Weak diversification

The 3 months correlation between Shenzhen and Jiangsu is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Centralcon Investment and Jiangsu Flowers King in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Flowers King 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 Jiangsu Flowers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Flowers King has no effect on the direction of Shenzhen Centralcon i.e., Shenzhen Centralcon and Jiangsu Flowers go up and down completely randomly.

Pair Corralation between Shenzhen Centralcon and Jiangsu Flowers

Assuming the 90 days trading horizon Shenzhen Centralcon Investment is expected to under-perform the Jiangsu Flowers. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Centralcon Investment is 2.2 times less risky than Jiangsu Flowers. The stock trades about -0.05 of its potential returns per unit of risk. The Jiangsu Flowers King is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  957.00  in Jiangsu Flowers King on October 24, 2024 and sell it today you would earn a total of  154.00  from holding Jiangsu Flowers King or generate 16.09% return on investment over 90 days.

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

Shenzhen Centralcon Investment  vs.  Jiangsu Flowers King

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.

Jiangsu Flowers King

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Flowers King are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Flowers sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Centralcon and Jiangsu Flowers

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

The idea behind Shenzhen Centralcon Investment and Jiangsu Flowers King 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.