Correlation Between Shenzhen Clou and Linktel Technologies

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

Diversification Opportunities for Shenzhen Clou and Linktel Technologies

0.4

Correlation Coefficient

Shenzhen Clou  Linktel Technologies

Very weak diversification

The 3 months correlation between Shenzhen and Linktel is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Clou Electronics and Linktel Technologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linktel Technologies 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 Linktel Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linktel Technologies has no effect on the direction of Shenzhen Clou i.e., Shenzhen Clou and Linktel Technologies go up and down completely randomly.

Pair Corralation between Shenzhen Clou and Linktel Technologies

Assuming the 90 days trading horizon Shenzhen Clou Electronics is expected to generate 0.63 times more return on investment than Linktel Technologies. However, Shenzhen Clou Electronics is 1.58 times less risky than Linktel Technologies. It trades about 0.06 of its potential returns per unit of risk. Linktel Technologies Co is currently generating about 0.04 per unit of risk. If you would invest  336.00  in Shenzhen Clou Electronics on October 2, 2024 and sell it today you would earn a total of  116.00  from holding Shenzhen Clou Electronics or generate 34.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.54%
Values	Daily Returns

Shenzhen Clou Electronics  vs.  Linktel Technologies Co

Shenzhen Clou Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Clou Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen Clou is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Linktel Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linktel Technologies Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shenzhen Clou and Linktel Technologies

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

The idea behind Shenzhen Clou Electronics and Linktel Technologies Co 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.