Correlation Between ChengDu Hi and 5I5j Holding

Can any of the company-specific risk be diversified away by investing in both ChengDu Hi and 5I5j Holding 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 ChengDu Hi and 5I5j Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ChengDu Hi Tech Development and 5I5j Holding Group, you can compare the effects of market volatilities on ChengDu Hi and 5I5j Holding 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 ChengDu Hi with a short position of 5I5j Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChengDu Hi and 5I5j Holding.

Diversification Opportunities for ChengDu Hi and 5I5j Holding

0.25

Correlation Coefficient

ChengDu Hi  5I5j Holding

Modest diversification

The 3 months correlation between ChengDu and 5I5j is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ChengDu Hi Tech Development and 5I5j Holding Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5I5j Holding Group and ChengDu Hi 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 ChengDu Hi Tech Development are associated (or correlated) with 5I5j Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5I5j Holding Group has no effect on the direction of ChengDu Hi i.e., ChengDu Hi and 5I5j Holding go up and down completely randomly.

Pair Corralation between ChengDu Hi and 5I5j Holding

Assuming the 90 days trading horizon ChengDu Hi Tech Development is expected to under-perform the 5I5j Holding. In addition to that, ChengDu Hi is 1.04 times more volatile than 5I5j Holding Group. It trades about -0.13 of its total potential returns per unit of risk. 5I5j Holding Group is currently generating about -0.01 per unit of volatility. If you would invest  318.00  in 5I5j Holding Group on December 25, 2024 and sell it today you would lose (11.00) from holding 5I5j Holding Group or give up 3.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

ChengDu Hi Tech Development  vs.  5I5j Holding Group

ChengDu Hi Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days ChengDu Hi Tech 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

5I5j Holding Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days 5I5j Holding Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 5I5j Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ChengDu Hi and 5I5j Holding

The main advantage of trading using opposite ChengDu Hi and 5I5j Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChengDu Hi position performs unexpectedly, 5I5j Holding 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 5I5j Holding will offset losses from the drop in 5I5j Holding's long position.

The idea behind ChengDu Hi Tech Development and 5I5j Holding Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.