Correlation Between Shenyang Huitian and SuZhou ChunXing

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Shenyang Huitian and SuZhou ChunXing 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 SuZhou ChunXing 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 SuZhou ChunXing Precision, you can compare the effects of market volatilities on Shenyang Huitian and SuZhou ChunXing 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 SuZhou ChunXing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenyang Huitian and SuZhou ChunXing.

Diversification Opportunities for Shenyang Huitian and SuZhou ChunXing

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Shenyang and SuZhou is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Huitian Thermal and SuZhou ChunXing Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SuZhou ChunXing Precision 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 SuZhou ChunXing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SuZhou ChunXing Precision has no effect on the direction of Shenyang Huitian i.e., Shenyang Huitian and SuZhou ChunXing go up and down completely randomly.

Pair Corralation between Shenyang Huitian and SuZhou ChunXing

Assuming the 90 days trading horizon Shenyang Huitian is expected to generate 10.6 times less return on investment than SuZhou ChunXing. But when comparing it to its historical volatility, Shenyang Huitian Thermal is 1.39 times less risky than SuZhou ChunXing. It trades about 0.01 of its potential returns per unit of risk. SuZhou ChunXing Precision is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  365.00  in SuZhou ChunXing Precision on September 27, 2024 and sell it today you would earn a total of  83.00  from holding SuZhou ChunXing Precision or generate 22.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy97.73%
ValuesDaily Returns

Shenyang Huitian Thermal  vs.  SuZhou ChunXing Precision

 Performance 
       Timeline  
Shenyang Huitian Thermal 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Shenyang Huitian Thermal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenyang Huitian sustained solid returns over the last few months and may actually be approaching a breakup point.
SuZhou ChunXing Precision 

Risk-Adjusted Performance

9 of 100

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

Shenyang Huitian and SuZhou ChunXing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shenyang Huitian and SuZhou ChunXing

The main advantage of trading using opposite Shenyang Huitian and SuZhou ChunXing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenyang Huitian position performs unexpectedly, SuZhou ChunXing 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 SuZhou ChunXing will offset losses from the drop in SuZhou ChunXing's long position.
The idea behind Shenyang Huitian Thermal and SuZhou ChunXing Precision 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.
Check out your portfolio center.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

Other Complementary Tools

Stocks Directory
Find actively traded stocks across global markets
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Bonds Directory
Find actively traded corporate debentures issued by US companies
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules