Correlation Between Shenzhen Noposion and Sany Heavy

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

Diversification Opportunities for Shenzhen Noposion and Sany Heavy

0.48

Correlation Coefficient

Shenzhen Noposion  Sany Heavy

Very weak diversification

The 3 months correlation between Shenzhen and Sany is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Noposion Agrochemical and Sany Heavy Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sany Heavy Energy 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 Sany Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sany Heavy Energy has no effect on the direction of Shenzhen Noposion i.e., Shenzhen Noposion and Sany Heavy go up and down completely randomly.

Pair Corralation between Shenzhen Noposion and Sany Heavy

Assuming the 90 days trading horizon Shenzhen Noposion Agrochemicals is expected to under-perform the Sany Heavy. In addition to that, Shenzhen Noposion is 1.53 times more volatile than Sany Heavy Energy. It trades about -0.11 of its total potential returns per unit of risk. Sany Heavy Energy is currently generating about -0.1 per unit of volatility. If you would invest  3,144  in Sany Heavy Energy on December 26, 2024 and sell it today you would lose (296.00) from holding Sany Heavy Energy or give up 9.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Shenzhen Noposion Agrochemical  vs.  Sany Heavy Energy

Shenzhen Noposion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Noposion Agrochemicals 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.

Sany Heavy Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sany Heavy Energy 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 Sany Heavy

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

The idea behind Shenzhen Noposion Agrochemicals and Sany Heavy Energy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.