Correlation Between Shantui Construction and Allwin Telecommunicatio

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

By analyzing existing cross correlation between Shantui Construction Machinery and Allwin Telecommunication Co, you can compare the effects of market volatilities on Shantui Construction and Allwin Telecommunicatio 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 Shantui Construction with a short position of Allwin Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shantui Construction and Allwin Telecommunicatio.

Diversification Opportunities for Shantui Construction and Allwin Telecommunicatio

0.18

Correlation Coefficient

Shantui Construction  Allwin Telecommunicatio

Average diversification

The 3 months correlation between Shantui and Allwin is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Shantui Construction Machinery and Allwin Telecommunication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allwin Telecommunicatio and Shantui Construction 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 Shantui Construction Machinery are associated (or correlated) with Allwin Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allwin Telecommunicatio has no effect on the direction of Shantui Construction i.e., Shantui Construction and Allwin Telecommunicatio go up and down completely randomly.

Pair Corralation between Shantui Construction and Allwin Telecommunicatio

Assuming the 90 days trading horizon Shantui Construction Machinery is expected to generate 0.32 times more return on investment than Allwin Telecommunicatio. However, Shantui Construction Machinery is 3.08 times less risky than Allwin Telecommunicatio. It trades about -0.1 of its potential returns per unit of risk. Allwin Telecommunication Co is currently generating about -0.19 per unit of risk. If you would invest  1,010  in Shantui Construction Machinery on October 10, 2024 and sell it today you would lose (40.00) from holding Shantui Construction Machinery or give up 3.96% of portfolio value over 90 days.

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

Shantui Construction Machinery  vs.  Allwin Telecommunication Co

Shantui Construction

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shantui Construction Machinery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shantui Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Allwin Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shantui Construction and Allwin Telecommunicatio

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

The idea behind Shantui Construction Machinery and Allwin Telecommunication Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .