Correlation Between Shenzhen Clou and Chenzhou Jingui

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

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

Diversification Opportunities for Shenzhen Clou and Chenzhou Jingui

0.67

Correlation Coefficient

Shenzhen Clou  Chenzhou Jingui

Poor diversification

The 3 months correlation between Shenzhen and Chenzhou is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Clou Electronics and Chenzhou Jingui Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chenzhou Jingui Silver and Shenzhen Clou 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 Clou Electronics are associated (or correlated) with Chenzhou Jingui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chenzhou Jingui Silver has no effect on the direction of Shenzhen Clou i.e., Shenzhen Clou and Chenzhou Jingui go up and down completely randomly.

Pair Corralation between Shenzhen Clou and Chenzhou Jingui

Assuming the 90 days trading horizon Shenzhen Clou Electronics is expected to under-perform the Chenzhou Jingui. In addition to that, Shenzhen Clou is 1.57 times more volatile than Chenzhou Jingui Silver. It trades about -0.21 of its total potential returns per unit of risk. Chenzhou Jingui Silver is currently generating about -0.23 per unit of volatility. If you would invest  387.00  in Chenzhou Jingui Silver on October 11, 2024 and sell it today you would lose (46.00) from holding Chenzhou Jingui Silver or give up 11.89% of portfolio value over 90 days.

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

Shenzhen Clou Electronics  vs.  Chenzhou Jingui Silver

Shenzhen Clou Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Clou Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Clou may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chenzhou Jingui Silver

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chenzhou Jingui Silver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chenzhou Jingui may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shenzhen Clou and Chenzhou Jingui

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

The idea behind Shenzhen Clou Electronics and Chenzhou Jingui Silver 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .