Correlation Between De Rucci and Shenzhen Glory

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

By analyzing existing cross correlation between De Rucci Healthy and Shenzhen Glory Medical, you can compare the effects of market volatilities on De Rucci and Shenzhen Glory 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 De Rucci with a short position of Shenzhen Glory. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Rucci and Shenzhen Glory.

Diversification Opportunities for De Rucci and Shenzhen Glory

0.68

Correlation Coefficient

De Rucci  Shenzhen Glory

Poor diversification

The 3 months correlation between 001323 and Shenzhen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding De Rucci Healthy and Shenzhen Glory Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Glory Medical and De Rucci 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 De Rucci Healthy are associated (or correlated) with Shenzhen Glory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Glory Medical has no effect on the direction of De Rucci i.e., De Rucci and Shenzhen Glory go up and down completely randomly.

Pair Corralation between De Rucci and Shenzhen Glory

Assuming the 90 days trading horizon De Rucci Healthy is expected to generate 0.47 times more return on investment than Shenzhen Glory. However, De Rucci Healthy is 2.14 times less risky than Shenzhen Glory. It trades about 0.07 of its potential returns per unit of risk. Shenzhen Glory Medical is currently generating about -0.46 per unit of risk. If you would invest  3,782  in De Rucci Healthy on October 8, 2024 and sell it today you would earn a total of  66.00  from holding De Rucci Healthy or generate 1.75% return on investment over 90 days.

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

De Rucci Healthy  vs.  Shenzhen Glory Medical

De Rucci Healthy

Risk-Adjusted Performance

8 of 100

OK

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

Shenzhen Glory Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Glory Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with De Rucci and Shenzhen Glory

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

The idea behind De Rucci Healthy and Shenzhen Glory Medical 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.