Correlation Between Shenyang Huitian and Heilongjiang Publishing

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

Diversification Opportunities for Shenyang Huitian and Heilongjiang Publishing

0.7

Correlation Coefficient

Shenyang Huitian  Heilongjiang Publishing

Poor diversification

The 3 months correlation between Shenyang and Heilongjiang is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Huitian Thermal and Heilongjiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heilongjiang Publishing 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 Heilongjiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heilongjiang Publishing has no effect on the direction of Shenyang Huitian i.e., Shenyang Huitian and Heilongjiang Publishing go up and down completely randomly.

Pair Corralation between Shenyang Huitian and Heilongjiang Publishing

Assuming the 90 days trading horizon Shenyang Huitian is expected to generate 3.08 times less return on investment than Heilongjiang Publishing. But when comparing it to its historical volatility, Shenyang Huitian Thermal is 1.47 times less risky than Heilongjiang Publishing. It trades about 0.02 of its potential returns per unit of risk. Heilongjiang Publishing Media is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,056  in Heilongjiang Publishing Media on October 5, 2024 and sell it today you would earn a total of  358.00  from holding Heilongjiang Publishing Media or generate 33.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.78%
Values	Daily Returns

Shenyang Huitian Thermal  vs.  Heilongjiang Publishing Media

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.

Heilongjiang Publishing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shenyang Huitian and Heilongjiang Publishing

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

The idea behind Shenyang Huitian Thermal and Heilongjiang Publishing Media 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 Global Correlations module to find global opportunities by holding instruments from different markets.