Correlation Between Henan Shuanghui and Cinda Securities

Can any of the company-specific risk be diversified away by investing in both Henan Shuanghui and Cinda Securities 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 Henan Shuanghui and Cinda Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Henan Shuanghui Investment and Cinda Securities Co, you can compare the effects of market volatilities on Henan Shuanghui and Cinda Securities 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 Henan Shuanghui with a short position of Cinda Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henan Shuanghui and Cinda Securities.

Diversification Opportunities for Henan Shuanghui and Cinda Securities

0.8

Correlation Coefficient

Henan Shuanghui  Cinda Securities

Very poor diversification

The 3 months correlation between Henan and Cinda is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Henan Shuanghui Investment and Cinda Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinda Securities and Henan Shuanghui 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 Henan Shuanghui Investment are associated (or correlated) with Cinda Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cinda Securities has no effect on the direction of Henan Shuanghui i.e., Henan Shuanghui and Cinda Securities go up and down completely randomly.

Pair Corralation between Henan Shuanghui and Cinda Securities

Assuming the 90 days trading horizon Henan Shuanghui is expected to generate 2.05 times less return on investment than Cinda Securities. But when comparing it to its historical volatility, Henan Shuanghui Investment is 1.99 times less risky than Cinda Securities. It trades about 0.11 of its potential returns per unit of risk. Cinda Securities Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,254  in Cinda Securities Co on September 22, 2024 and sell it today you would earn a total of  279.00  from holding Cinda Securities Co or generate 22.25% return on investment over 90 days.

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

Henan Shuanghui Investment  vs.  Cinda Securities Co

Henan Shuanghui Inve

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Henan Shuanghui Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Henan Shuanghui may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cinda Securities

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cinda Securities Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cinda Securities sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Henan Shuanghui and Cinda Securities

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

The idea behind Henan Shuanghui Investment and Cinda Securities Co 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.