Correlation Between Shenyang Huitian and A Zenith

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Can any of the company-specific risk be diversified away by investing in both Shenyang Huitian and A Zenith 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 A Zenith 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 A Zenith Home Furnishings, you can compare the effects of market volatilities on Shenyang Huitian and A Zenith 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 A Zenith. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenyang Huitian and A Zenith.

Diversification Opportunities for Shenyang Huitian and A Zenith

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Shenyang and 603389 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Huitian Thermal and A Zenith Home Furnishings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Zenith Home 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 A Zenith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Zenith Home has no effect on the direction of Shenyang Huitian i.e., Shenyang Huitian and A Zenith go up and down completely randomly.

Pair Corralation between Shenyang Huitian and A Zenith

Assuming the 90 days trading horizon Shenyang Huitian Thermal is expected to generate 0.76 times more return on investment than A Zenith. However, Shenyang Huitian Thermal is 1.31 times less risky than A Zenith. It trades about -0.1 of its potential returns per unit of risk. A Zenith Home Furnishings is currently generating about -0.11 per unit of risk. If you would invest  379.00  in Shenyang Huitian Thermal on October 11, 2024 and sell it today you would lose (43.00) from holding Shenyang Huitian Thermal or give up 11.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Shenyang Huitian Thermal  vs.  A Zenith Home Furnishings

 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.
A Zenith Home 

Risk-Adjusted Performance

0 of 100

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

Shenyang Huitian and A Zenith Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shenyang Huitian and A Zenith

The main advantage of trading using opposite Shenyang Huitian and A Zenith positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenyang Huitian position performs unexpectedly, A Zenith 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 A Zenith will offset losses from the drop in A Zenith's long position.
The idea behind Shenyang Huitian Thermal and A Zenith Home Furnishings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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