Correlation Between Shenzhen SDG and Tangel Publishing

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

By analyzing existing cross correlation between Shenzhen SDG Information and Tangel Publishing, you can compare the effects of market volatilities on Shenzhen SDG and Tangel Publishing 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 SDG with a short position of Tangel Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen SDG and Tangel Publishing.

Diversification Opportunities for Shenzhen SDG and Tangel Publishing

0.7

Correlation Coefficient

Shenzhen SDG  Tangel Publishing

Poor diversification

The 3 months correlation between Shenzhen and Tangel is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen SDG Information and Tangel Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangel Publishing and Shenzhen SDG 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 SDG Information are associated (or correlated) with Tangel Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangel Publishing has no effect on the direction of Shenzhen SDG i.e., Shenzhen SDG and Tangel Publishing go up and down completely randomly.

Pair Corralation between Shenzhen SDG and Tangel Publishing

Assuming the 90 days trading horizon Shenzhen SDG is expected to generate 18.0 times less return on investment than Tangel Publishing. But when comparing it to its historical volatility, Shenzhen SDG Information is 1.13 times less risky than Tangel Publishing. It trades about 0.0 of its potential returns per unit of risk. Tangel Publishing is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  330.00  in Tangel Publishing on October 11, 2024 and sell it today you would earn a total of  26.00  from holding Tangel Publishing or generate 7.88% return on investment over 90 days.

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

Shenzhen SDG Information  vs.  Tangel Publishing

Shenzhen SDG Information

Risk-Adjusted Performance

11 of 100

Good

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

Tangel Publishing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tangel Publishing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tangel Publishing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shenzhen SDG and Tangel Publishing

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

The idea behind Shenzhen SDG Information and Tangel Publishing 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.