Correlation Between Shenyang Huitian and National Silicon

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

Diversification Opportunities for Shenyang Huitian and National Silicon

0.2

Correlation Coefficient

Shenyang Huitian  National Silicon

Modest diversification

The 3 months correlation between Shenyang and National is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Huitian Thermal and National Silicon Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Silicon Industry 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 National Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Silicon Industry has no effect on the direction of Shenyang Huitian i.e., Shenyang Huitian and National Silicon go up and down completely randomly.

Pair Corralation between Shenyang Huitian and National Silicon

Assuming the 90 days trading horizon Shenyang Huitian Thermal is expected to generate 0.94 times more return on investment than National Silicon. However, Shenyang Huitian Thermal is 1.06 times less risky than National Silicon. It trades about 0.05 of its potential returns per unit of risk. National Silicon Industry is currently generating about -0.06 per unit of risk. If you would invest  329.00  in Shenyang Huitian Thermal on October 5, 2024 and sell it today you would earn a total of  23.00  from holding Shenyang Huitian Thermal or generate 6.99% return on investment over 90 days.

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

Shenyang Huitian Thermal  vs.  National Silicon Industry

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.

National Silicon Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Silicon Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shenyang Huitian and National Silicon

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

The idea behind Shenyang Huitian Thermal and National Silicon Industry 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.