Correlation Between Shenzhen MTC and 159005

Can any of the company-specific risk be diversified away by investing in both Shenzhen MTC and 159005 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 MTC and 159005 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen MTC Co and 159005, you can compare the effects of market volatilities on Shenzhen MTC and 159005 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 MTC with a short position of 159005. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen MTC and 159005.

Diversification Opportunities for Shenzhen MTC and 159005

0.35

Correlation Coefficient

Shenzhen MTC  159005

Weak diversification

The 3 months correlation between Shenzhen and 159005 is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen MTC Co and 159005 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 159005 and Shenzhen MTC 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 MTC Co are associated (or correlated) with 159005. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 159005 has no effect on the direction of Shenzhen MTC i.e., Shenzhen MTC and 159005 go up and down completely randomly.

Pair Corralation between Shenzhen MTC and 159005

Assuming the 90 days trading horizon Shenzhen MTC Co is expected to generate 127.63 times more return on investment than 159005. However, Shenzhen MTC is 127.63 times more volatile than 159005. It trades about 0.03 of its potential returns per unit of risk. 159005 is currently generating about 0.18 per unit of risk. If you would invest  516.00  in Shenzhen MTC Co on December 1, 2024 and sell it today you would earn a total of  12.00  from holding Shenzhen MTC Co or generate 2.33% return on investment over 90 days.

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

Shenzhen MTC Co  vs.  159005

Shenzhen MTC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen MTC Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen MTC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

159005

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 159005 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 159005 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shenzhen MTC and 159005

The main advantage of trading using opposite Shenzhen MTC and 159005 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen MTC position performs unexpectedly, 159005 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 159005 will offset losses from the drop in 159005's long position.

The idea behind Shenzhen MTC Co and 159005 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.