Correlation Between Shenzhen Hifuture and Ningbo Jianan

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

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

Diversification Opportunities for Shenzhen Hifuture and Ningbo Jianan

-0.5

Correlation Coefficient

Shenzhen Hifuture  Ningbo Jianan

Very good diversification

The 3 months correlation between Shenzhen and Ningbo is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Hifuture Electric and Ningbo Jianan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Jianan Electronics and Shenzhen Hifuture 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 Hifuture Electric are associated (or correlated) with Ningbo Jianan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Jianan Electronics has no effect on the direction of Shenzhen Hifuture i.e., Shenzhen Hifuture and Ningbo Jianan go up and down completely randomly.

Pair Corralation between Shenzhen Hifuture and Ningbo Jianan

Assuming the 90 days trading horizon Shenzhen Hifuture Electric is expected to under-perform the Ningbo Jianan. In addition to that, Shenzhen Hifuture is 1.22 times more volatile than Ningbo Jianan Electronics. It trades about -0.11 of its total potential returns per unit of risk. Ningbo Jianan Electronics is currently generating about 0.05 per unit of volatility. If you would invest  2,220  in Ningbo Jianan Electronics on December 31, 2024 and sell it today you would earn a total of  110.00  from holding Ningbo Jianan Electronics or generate 4.95% return on investment over 90 days.

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

Shenzhen Hifuture Electric  vs.  Ningbo Jianan Electronics

Shenzhen Hifuture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Hifuture Electric 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 May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ningbo Jianan Electronics

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Jianan Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Jianan may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Shenzhen Hifuture and Ningbo Jianan

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

The idea behind Shenzhen Hifuture Electric and Ningbo Jianan Electronics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.