Correlation Between Shanghai Metersbonwe and Guangzhou Jointas

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

By analyzing existing cross correlation between Shanghai Metersbonwe FashionAccessories and Guangzhou Jointas Chemical, you can compare the effects of market volatilities on Shanghai Metersbonwe and Guangzhou Jointas 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 Shanghai Metersbonwe with a short position of Guangzhou Jointas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Metersbonwe and Guangzhou Jointas.

Diversification Opportunities for Shanghai Metersbonwe and Guangzhou Jointas

0.02

Correlation Coefficient

Shanghai Metersbonwe  Guangzhou Jointas

Significant diversification

The 3 months correlation between Shanghai and Guangzhou is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Metersbonwe FashionAc and Guangzhou Jointas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jointas and Shanghai Metersbonwe 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 Shanghai Metersbonwe FashionAccessories are associated (or correlated) with Guangzhou Jointas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jointas has no effect on the direction of Shanghai Metersbonwe i.e., Shanghai Metersbonwe and Guangzhou Jointas go up and down completely randomly.

Pair Corralation between Shanghai Metersbonwe and Guangzhou Jointas

Assuming the 90 days trading horizon Shanghai Metersbonwe FashionAccessories is expected to generate 2.13 times more return on investment than Guangzhou Jointas. However, Shanghai Metersbonwe is 2.13 times more volatile than Guangzhou Jointas Chemical. It trades about 0.01 of its potential returns per unit of risk. Guangzhou Jointas Chemical is currently generating about -0.02 per unit of risk. If you would invest  222.00  in Shanghai Metersbonwe FashionAccessories on December 2, 2024 and sell it today you would lose (11.00) from holding Shanghai Metersbonwe FashionAccessories or give up 4.95% of portfolio value over 90 days.

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

Shanghai Metersbonwe FashionAc  vs.  Guangzhou Jointas Chemical

Shanghai Metersbonwe

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Metersbonwe FashionAccessories are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shanghai Metersbonwe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guangzhou Jointas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangzhou Jointas Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangzhou Jointas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shanghai Metersbonwe and Guangzhou Jointas

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

The idea behind Shanghai Metersbonwe FashionAccessories and Guangzhou Jointas Chemical 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..