Correlation Between CNPC Capital and Shenyang Blue

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

By analyzing existing cross correlation between CNPC Capital Co and Shenyang Blue Silver, you can compare the effects of market volatilities on CNPC Capital and Shenyang Blue 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 CNPC Capital with a short position of Shenyang Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNPC Capital and Shenyang Blue.

Diversification Opportunities for CNPC Capital and Shenyang Blue

0.89

Correlation Coefficient

CNPC Capital  Shenyang Blue

Very poor diversification

The 3 months correlation between CNPC and Shenyang is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding CNPC Capital Co and Shenyang Blue Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyang Blue Silver and CNPC Capital 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 CNPC Capital Co are associated (or correlated) with Shenyang Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyang Blue Silver has no effect on the direction of CNPC Capital i.e., CNPC Capital and Shenyang Blue go up and down completely randomly.

Pair Corralation between CNPC Capital and Shenyang Blue

Assuming the 90 days trading horizon CNPC Capital is expected to generate 2.04 times less return on investment than Shenyang Blue. But when comparing it to its historical volatility, CNPC Capital Co is 1.74 times less risky than Shenyang Blue. It trades about 0.05 of its potential returns per unit of risk. Shenyang Blue Silver is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,527  in Shenyang Blue Silver on October 3, 2024 and sell it today you would earn a total of  745.00  from holding Shenyang Blue Silver or generate 48.79% return on investment over 90 days.

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

CNPC Capital Co  vs.  Shenyang Blue Silver

CNPC Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNPC Capital Co 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.

Shenyang Blue Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenyang Blue Silver 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.

Pair Trading with CNPC Capital and Shenyang Blue

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

The idea behind CNPC Capital Co and Shenyang Blue Silver 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.