Correlation Between De Rucci and Shenyu Communication

Can any of the company-specific risk be diversified away by investing in both De Rucci and Shenyu Communication 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 Shenyu Communication 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 Shenyu Communication Technology, you can compare the effects of market volatilities on De Rucci and Shenyu Communication 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 Shenyu Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Rucci and Shenyu Communication.

Diversification Opportunities for De Rucci and Shenyu Communication

-0.18

Correlation Coefficient

De Rucci  Shenyu Communication

Good diversification

The 3 months correlation between 001323 and Shenyu is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding De Rucci Healthy and Shenyu Communication Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyu Communication 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 Shenyu Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyu Communication has no effect on the direction of De Rucci i.e., De Rucci and Shenyu Communication go up and down completely randomly.

Pair Corralation between De Rucci and Shenyu Communication

Assuming the 90 days trading horizon De Rucci Healthy is expected to generate 0.27 times more return on investment than Shenyu Communication. However, De Rucci Healthy is 3.77 times less risky than Shenyu Communication. It trades about -0.01 of its potential returns per unit of risk. Shenyu Communication Technology is currently generating about -0.04 per unit of risk. If you would invest  3,662  in De Rucci Healthy on October 25, 2024 and sell it today you would lose (20.00) from holding De Rucci Healthy or give up 0.55% of portfolio value over 90 days.

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

De Rucci Healthy  vs.  Shenyu Communication Technolog

De Rucci Healthy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shenyu Communication

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenyu Communication Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenyu Communication sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with De Rucci and Shenyu Communication

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

The idea behind De Rucci Healthy and Shenyu Communication Technology 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.