Correlation Between Shenzhen Agricultural and Jiangsu Xinri

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

By analyzing existing cross correlation between Shenzhen Agricultural Products and Jiangsu Xinri E Vehicle, you can compare the effects of market volatilities on Shenzhen Agricultural and Jiangsu Xinri 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 Agricultural with a short position of Jiangsu Xinri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Agricultural and Jiangsu Xinri.

Diversification Opportunities for Shenzhen Agricultural and Jiangsu Xinri

-0.21

Correlation Coefficient

Shenzhen Agricultural  Jiangsu Xinri

Very good diversification

The 3 months correlation between Shenzhen and Jiangsu is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Agricultural Products and Jiangsu Xinri E Vehicle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Xinri E and Shenzhen Agricultural 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 Agricultural Products are associated (or correlated) with Jiangsu Xinri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Xinri E has no effect on the direction of Shenzhen Agricultural i.e., Shenzhen Agricultural and Jiangsu Xinri go up and down completely randomly.

Pair Corralation between Shenzhen Agricultural and Jiangsu Xinri

Assuming the 90 days trading horizon Shenzhen Agricultural Products is expected to under-perform the Jiangsu Xinri. In addition to that, Shenzhen Agricultural is 1.03 times more volatile than Jiangsu Xinri E Vehicle. It trades about -0.09 of its total potential returns per unit of risk. Jiangsu Xinri E Vehicle is currently generating about 0.03 per unit of volatility. If you would invest  1,077  in Jiangsu Xinri E Vehicle on December 26, 2024 and sell it today you would earn a total of  20.00  from holding Jiangsu Xinri E Vehicle or generate 1.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Shenzhen Agricultural Products  vs.  Jiangsu Xinri E Vehicle

Shenzhen Agricultural

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Agricultural Products 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 Xinri E

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Xinri E Vehicle are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiangsu Xinri 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 Agricultural and Jiangsu Xinri

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

The idea behind Shenzhen Agricultural Products and Jiangsu Xinri E Vehicle 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.