Correlation Between Shenzhen SDG and OBiO Technology

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

Diversification Opportunities for Shenzhen SDG and OBiO Technology

0.64

Correlation Coefficient

Shenzhen SDG  OBiO Technology

Poor diversification

The 3 months correlation between Shenzhen and OBiO is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen SDG Information and OBiO Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBiO Technology Corp 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 OBiO Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBiO Technology Corp has no effect on the direction of Shenzhen SDG i.e., Shenzhen SDG and OBiO Technology go up and down completely randomly.

Pair Corralation between Shenzhen SDG and OBiO Technology

Assuming the 90 days trading horizon Shenzhen SDG Information is expected to generate 0.76 times more return on investment than OBiO Technology. However, Shenzhen SDG Information is 1.31 times less risky than OBiO Technology. It trades about 0.05 of its potential returns per unit of risk. OBiO Technology Corp is currently generating about -0.02 per unit of risk. If you would invest  608.00  in Shenzhen SDG Information on December 2, 2024 and sell it today you would earn a total of  32.00  from holding Shenzhen SDG Information or generate 5.26% 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.  OBiO Technology Corp

Shenzhen SDG Information

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen SDG Information are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen SDG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

OBiO Technology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days OBiO Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, OBiO Technology 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 SDG and OBiO Technology

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

The idea behind Shenzhen SDG Information and OBiO Technology Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.