Correlation Between Vanfund Urban and Shenzhen Centralcon

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

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

Diversification Opportunities for Vanfund Urban and Shenzhen Centralcon

0.89

Correlation Coefficient

Vanfund Urban  Shenzhen Centralcon

Very poor diversification

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

Pair Corralation between Vanfund Urban and Shenzhen Centralcon

Assuming the 90 days trading horizon Vanfund Urban Investment is expected to generate 1.03 times more return on investment than Shenzhen Centralcon. However, Vanfund Urban is 1.03 times more volatile than Shenzhen Centralcon Investment. It trades about 0.24 of its potential returns per unit of risk. Shenzhen Centralcon Investment is currently generating about 0.2 per unit of risk. If you would invest  369.00  in Vanfund Urban Investment on September 5, 2024 and sell it today you would earn a total of  220.00  from holding Vanfund Urban Investment or generate 59.62% return on investment over 90 days.

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

Vanfund Urban Investment  vs.  Shenzhen Centralcon Investment

Vanfund Urban Investment

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanfund Urban Investment are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vanfund Urban sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Centralcon

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Centralcon Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Centralcon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanfund Urban and Shenzhen Centralcon

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

The idea behind Vanfund Urban Investment and Shenzhen Centralcon Investment 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.