Correlation Between Shenzhen Coship and BOE Technology

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

By analyzing existing cross correlation between Shenzhen Coship Electronics and BOE Technology Group, you can compare the effects of market volatilities on Shenzhen Coship and BOE Technology 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 Shenzhen Coship with a short position of BOE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Coship and BOE Technology.

Diversification Opportunities for Shenzhen Coship and BOE Technology

0.1

Correlation Coefficient

Shenzhen Coship  BOE Technology

Average diversification

The 3 months correlation between Shenzhen and BOE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Coship Electronics and BOE Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOE Technology Group and Shenzhen Coship 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 Shenzhen Coship Electronics are associated (or correlated) with BOE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOE Technology Group has no effect on the direction of Shenzhen Coship i.e., Shenzhen Coship and BOE Technology go up and down completely randomly.

Pair Corralation between Shenzhen Coship and BOE Technology

Assuming the 90 days trading horizon Shenzhen Coship Electronics is expected to generate 2.1 times more return on investment than BOE Technology. However, Shenzhen Coship is 2.1 times more volatile than BOE Technology Group. It trades about 0.13 of its potential returns per unit of risk. BOE Technology Group is currently generating about 0.02 per unit of risk. If you would invest  186.00  in Shenzhen Coship Electronics on October 5, 2024 and sell it today you would earn a total of  435.00  from holding Shenzhen Coship Electronics or generate 233.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.34%
Values	Daily Returns

Shenzhen Coship Electronics  vs.  BOE Technology Group

Shenzhen Coship Elec

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Coship Electronics are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Coship sustained solid returns over the last few months and may actually be approaching a breakup point.

BOE Technology Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOE Technology Group 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 Shenzhen Coship and BOE Technology

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

The idea behind Shenzhen Coship Electronics and BOE Technology Group 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.