Correlation Between Guangdong Shenglu and Shanghai Fudan

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

By analyzing existing cross correlation between Guangdong Shenglu Telecommunication and Shanghai Fudan Microelectronics, you can compare the effects of market volatilities on Guangdong Shenglu and Shanghai Fudan 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 Guangdong Shenglu with a short position of Shanghai Fudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Shenglu and Shanghai Fudan.

Diversification Opportunities for Guangdong Shenglu and Shanghai Fudan

0.0

Correlation Coefficient

Guangdong Shenglu  Shanghai Fudan

Pay attention - limited upside

The 3 months correlation between Guangdong and Shanghai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Shenglu Telecommunic and Shanghai Fudan Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Fudan Micro and Guangdong Shenglu 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 Guangdong Shenglu Telecommunication are associated (or correlated) with Shanghai Fudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Fudan Micro has no effect on the direction of Guangdong Shenglu i.e., Guangdong Shenglu and Shanghai Fudan go up and down completely randomly.

Pair Corralation between Guangdong Shenglu and Shanghai Fudan

If you would invest  0.00  in Shanghai Fudan Microelectronics on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Shanghai Fudan Microelectronics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.21%
Values	Daily Returns

Guangdong Shenglu Telecommunic  vs.  Shanghai Fudan Microelectronic

Guangdong Shenglu

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Shenglu Telecommunication are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Shenglu sustained solid returns over the last few months and may actually be approaching a breakup point.

Shanghai Fudan Micro

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Guangdong Shenglu and Shanghai Fudan

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

The idea behind Guangdong Shenglu Telecommunication and Shanghai Fudan Microelectronics 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.