Correlation Between Shantui Construction and Inly Media

Can any of the company-specific risk be diversified away by investing in both Shantui Construction and Inly Media 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 Inly Media 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 Inly Media Co, you can compare the effects of market volatilities on Shantui Construction and Inly Media 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 Inly Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shantui Construction and Inly Media.

Diversification Opportunities for Shantui Construction and Inly Media

0.42

Correlation Coefficient

Shantui Construction  Inly Media

Very weak diversification

The 3 months correlation between Shantui and Inly is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shantui Construction Machinery and Inly Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inly Media 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 Inly Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inly Media has no effect on the direction of Shantui Construction i.e., Shantui Construction and Inly Media go up and down completely randomly.

Pair Corralation between Shantui Construction and Inly Media

Assuming the 90 days trading horizon Shantui Construction Machinery is expected to generate 0.57 times more return on investment than Inly Media. However, Shantui Construction Machinery is 1.74 times less risky than Inly Media. It trades about 0.1 of its potential returns per unit of risk. Inly Media Co is currently generating about 0.05 per unit of risk. If you would invest  833.00  in Shantui Construction Machinery on October 6, 2024 and sell it today you would earn a total of  152.00  from holding Shantui Construction Machinery or generate 18.25% return on investment over 90 days.

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

Shantui Construction Machinery  vs.  Inly Media Co

Shantui Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shantui Construction Machinery are ranked lower than 8 (%) 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.

Inly Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inly Media Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inly Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shantui Construction and Inly Media

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

The idea behind Shantui Construction Machinery and Inly Media 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.