Correlation Between Shenzhen Coship and Ningbo Fujia

Can any of the company-specific risk be diversified away by investing in both Shenzhen Coship and Ningbo Fujia 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 Ningbo Fujia 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 Ningbo Fujia Industrial, you can compare the effects of market volatilities on Shenzhen Coship and Ningbo Fujia 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 Ningbo Fujia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Coship and Ningbo Fujia.

Diversification Opportunities for Shenzhen Coship and Ningbo Fujia

-0.74

Correlation Coefficient

Shenzhen Coship  Ningbo Fujia

Pay attention - limited upside

The 3 months correlation between Shenzhen and Ningbo is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Coship Electronics and Ningbo Fujia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Fujia Industrial 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 Ningbo Fujia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Fujia Industrial has no effect on the direction of Shenzhen Coship i.e., Shenzhen Coship and Ningbo Fujia go up and down completely randomly.

Pair Corralation between Shenzhen Coship and Ningbo Fujia

Assuming the 90 days trading horizon Shenzhen Coship Electronics is expected to under-perform the Ningbo Fujia. In addition to that, Shenzhen Coship is 1.07 times more volatile than Ningbo Fujia Industrial. It trades about -0.02 of its total potential returns per unit of risk. Ningbo Fujia Industrial is currently generating about 0.07 per unit of volatility. If you would invest  1,492  in Ningbo Fujia Industrial on December 26, 2024 and sell it today you would earn a total of  194.00  from holding Ningbo Fujia Industrial or generate 13.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Shenzhen Coship Electronics  vs.  Ningbo Fujia Industrial

Shenzhen Coship Elec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Coship Electronics 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.

Ningbo Fujia Industrial

Risk-Adjusted Performance

Modest

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

Pair Trading with Shenzhen Coship and Ningbo Fujia

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

The idea behind Shenzhen Coship Electronics and Ningbo Fujia Industrial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.