Correlation Between Shenzhen Noposion and Shanghai CEO

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

By analyzing existing cross correlation between Shenzhen Noposion Agrochemicals and Shanghai CEO Environmental, you can compare the effects of market volatilities on Shenzhen Noposion and Shanghai CEO 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 Noposion with a short position of Shanghai CEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Noposion and Shanghai CEO.

Diversification Opportunities for Shenzhen Noposion and Shanghai CEO

-0.21

Correlation Coefficient

Shenzhen Noposion  Shanghai CEO

Very good diversification

The 3 months correlation between Shenzhen and Shanghai is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Noposion Agrochemical and Shanghai CEO Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai CEO Environ and Shenzhen Noposion 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 Noposion Agrochemicals are associated (or correlated) with Shanghai CEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai CEO Environ has no effect on the direction of Shenzhen Noposion i.e., Shenzhen Noposion and Shanghai CEO go up and down completely randomly.

Pair Corralation between Shenzhen Noposion and Shanghai CEO

Assuming the 90 days trading horizon Shenzhen Noposion Agrochemicals is expected to under-perform the Shanghai CEO. In addition to that, Shenzhen Noposion is 1.38 times more volatile than Shanghai CEO Environmental. It trades about -0.14 of its total potential returns per unit of risk. Shanghai CEO Environmental is currently generating about -0.1 per unit of volatility. If you would invest  879.00  in Shanghai CEO Environmental on October 25, 2024 and sell it today you would lose (48.00) from holding Shanghai CEO Environmental or give up 5.46% of portfolio value over 90 days.

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

Shenzhen Noposion Agrochemical  vs.  Shanghai CEO Environmental

Shenzhen Noposion

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Noposion Agrochemicals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Noposion may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shanghai CEO Environ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai CEO Environmental 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 Noposion and Shanghai CEO

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

The idea behind Shenzhen Noposion Agrochemicals and Shanghai CEO Environmental 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.