Correlation Between Shenyang Huitian and Wasu Media

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

By analyzing existing cross correlation between Shenyang Huitian Thermal and Wasu Media Holding, you can compare the effects of market volatilities on Shenyang Huitian and Wasu 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 Shenyang Huitian with a short position of Wasu Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenyang Huitian and Wasu Media.

Diversification Opportunities for Shenyang Huitian and Wasu Media

0.84

Correlation Coefficient

Shenyang Huitian  Wasu Media

Very poor diversification

The 3 months correlation between Shenyang and Wasu is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Huitian Thermal and Wasu Media Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasu Media Holding and Shenyang Huitian 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 Shenyang Huitian Thermal are associated (or correlated) with Wasu Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasu Media Holding has no effect on the direction of Shenyang Huitian i.e., Shenyang Huitian and Wasu Media go up and down completely randomly.

Pair Corralation between Shenyang Huitian and Wasu Media

Assuming the 90 days trading horizon Shenyang Huitian Thermal is expected to under-perform the Wasu Media. In addition to that, Shenyang Huitian is 1.73 times more volatile than Wasu Media Holding. It trades about -0.05 of its total potential returns per unit of risk. Wasu Media Holding is currently generating about -0.08 per unit of volatility. If you would invest  742.00  in Wasu Media Holding on October 5, 2024 and sell it today you would lose (37.00) from holding Wasu Media Holding or give up 4.99% of portfolio value over 90 days.

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

Shenyang Huitian Thermal  vs.  Wasu Media Holding

Shenyang Huitian Thermal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenyang Huitian Thermal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenyang Huitian may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wasu Media Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wasu Media Holding 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 Shenyang Huitian and Wasu Media

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

The idea behind Shenyang Huitian Thermal and Wasu Media Holding 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.