Correlation Between Shandong and Imeik Technology

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

By analyzing existing cross correlation between Shandong Hi Speed RoadBridge and Imeik Technology Development, you can compare the effects of market volatilities on Shandong and Imeik 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 Shandong with a short position of Imeik Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong and Imeik Technology.

Diversification Opportunities for Shandong and Imeik Technology

0.6

Correlation Coefficient

Shandong  Imeik Technology

Poor diversification

The 3 months correlation between Shandong and Imeik is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hi Speed RoadBridge and Imeik Technology Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imeik Technology Dev and Shandong 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 Shandong Hi Speed RoadBridge are associated (or correlated) with Imeik Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imeik Technology Dev has no effect on the direction of Shandong i.e., Shandong and Imeik Technology go up and down completely randomly.

Pair Corralation between Shandong and Imeik Technology

Assuming the 90 days trading horizon Shandong Hi Speed RoadBridge is expected to generate 0.54 times more return on investment than Imeik Technology. However, Shandong Hi Speed RoadBridge is 1.86 times less risky than Imeik Technology. It trades about -0.41 of its potential returns per unit of risk. Imeik Technology Development is currently generating about -0.36 per unit of risk. If you would invest  638.00  in Shandong Hi Speed RoadBridge on October 8, 2024 and sell it today you would lose (68.00) from holding Shandong Hi Speed RoadBridge or give up 10.66% of portfolio value over 90 days.

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

Shandong Hi Speed RoadBridge  vs.  Imeik Technology Development

Shandong Hi Speed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shandong Hi Speed RoadBridge 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.

Imeik Technology Dev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imeik Technology Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shandong and Imeik Technology

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

The idea behind Shandong Hi Speed RoadBridge and Imeik Technology Development 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.