Correlation Between Shenzhen Hifuture and Zhongtong Guomai

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

Diversification Opportunities for Shenzhen Hifuture and Zhongtong Guomai

0.03

Correlation Coefficient

Shenzhen Hifuture  Zhongtong Guomai

Significant diversification

The 3 months correlation between Shenzhen and Zhongtong is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Hifuture Electric and Zhongtong Guomai Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongtong Guomai Com 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 Zhongtong Guomai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongtong Guomai Com has no effect on the direction of Shenzhen Hifuture i.e., Shenzhen Hifuture and Zhongtong Guomai go up and down completely randomly.

Pair Corralation between Shenzhen Hifuture and Zhongtong Guomai

Assuming the 90 days trading horizon Shenzhen Hifuture Electric is expected to under-perform the Zhongtong Guomai. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Hifuture Electric is 1.23 times less risky than Zhongtong Guomai. The stock trades about -0.09 of its potential returns per unit of risk. The Zhongtong Guomai Communication is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  865.00  in Zhongtong Guomai Communication on December 28, 2024 and sell it today you would lose (82.00) from holding Zhongtong Guomai Communication or give up 9.48% of portfolio value over 90 days.

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

Shenzhen Hifuture Electric  vs.  Zhongtong Guomai Communication

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zhongtong Guomai Com

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhongtong Guomai Communication 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 Hifuture and Zhongtong Guomai

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

The idea behind Shenzhen Hifuture Electric and Zhongtong Guomai Communication 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.