Correlation Between Shenzhen Topway and Gohigh Data

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

By analyzing existing cross correlation between Shenzhen Topway Video and Gohigh Data Networks, you can compare the effects of market volatilities on Shenzhen Topway and Gohigh Data 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 Topway with a short position of Gohigh Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Topway and Gohigh Data.

Diversification Opportunities for Shenzhen Topway and Gohigh Data

0.89

Correlation Coefficient

Shenzhen Topway  Gohigh Data

Very poor diversification

The 3 months correlation between Shenzhen and Gohigh is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Topway Video and Gohigh Data Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gohigh Data Networks and Shenzhen Topway 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 Topway Video are associated (or correlated) with Gohigh Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gohigh Data Networks has no effect on the direction of Shenzhen Topway i.e., Shenzhen Topway and Gohigh Data go up and down completely randomly.

Pair Corralation between Shenzhen Topway and Gohigh Data

Assuming the 90 days trading horizon Shenzhen Topway Video is expected to generate 1.12 times more return on investment than Gohigh Data. However, Shenzhen Topway is 1.12 times more volatile than Gohigh Data Networks. It trades about -0.03 of its potential returns per unit of risk. Gohigh Data Networks is currently generating about -0.04 per unit of risk. If you would invest  865.00  in Shenzhen Topway Video on October 24, 2024 and sell it today you would lose (95.00) from holding Shenzhen Topway Video or give up 10.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Shenzhen Topway Video  vs.  Gohigh Data Networks

Shenzhen Topway Video

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Topway Video 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.

Gohigh Data Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gohigh Data Networks 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 Topway and Gohigh Data

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

The idea behind Shenzhen Topway Video and Gohigh Data Networks 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.