Correlation Between Bengang Steel and Shenzhen Fortune

Can any of the company-specific risk be diversified away by investing in both Bengang Steel and Shenzhen Fortune 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 Bengang Steel and Shenzhen Fortune into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bengang Steel Plates and Shenzhen Fortune Trend, you can compare the effects of market volatilities on Bengang Steel and Shenzhen Fortune 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 Bengang Steel with a short position of Shenzhen Fortune. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bengang Steel and Shenzhen Fortune.

Diversification Opportunities for Bengang Steel and Shenzhen Fortune

0.33

Correlation Coefficient

Bengang Steel  Shenzhen Fortune

Weak diversification

The 3 months correlation between Bengang and Shenzhen is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bengang Steel Plates and Shenzhen Fortune Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Fortune Trend and Bengang Steel 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 Bengang Steel Plates are associated (or correlated) with Shenzhen Fortune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Fortune Trend has no effect on the direction of Bengang Steel i.e., Bengang Steel and Shenzhen Fortune go up and down completely randomly.

Pair Corralation between Bengang Steel and Shenzhen Fortune

Assuming the 90 days trading horizon Bengang Steel Plates is expected to generate 0.99 times more return on investment than Shenzhen Fortune. However, Bengang Steel Plates is 1.01 times less risky than Shenzhen Fortune. It trades about 0.07 of its potential returns per unit of risk. Shenzhen Fortune Trend is currently generating about -0.06 per unit of risk. If you would invest  360.00  in Bengang Steel Plates on December 1, 2024 and sell it today you would earn a total of  43.00  from holding Bengang Steel Plates or generate 11.94% return on investment over 90 days.

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

Bengang Steel Plates  vs.  Shenzhen Fortune Trend

Bengang Steel Plates

Risk-Adjusted Performance

Modest

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

Shenzhen Fortune Trend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Fortune Trend 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bengang Steel and Shenzhen Fortune

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

The idea behind Bengang Steel Plates and Shenzhen Fortune Trend 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..