Correlation Between Shandong Polymer and CSG Holding

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

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

Diversification Opportunities for Shandong Polymer and CSG Holding

-0.17

Correlation Coefficient

Shandong Polymer  CSG Holding

Good diversification

The 3 months correlation between Shandong and CSG is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Polymer Biochemicals and CSG Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSG Holding and Shandong Polymer 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 Shandong Polymer Biochemicals are associated (or correlated) with CSG Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSG Holding has no effect on the direction of Shandong Polymer i.e., Shandong Polymer and CSG Holding go up and down completely randomly.

Pair Corralation between Shandong Polymer and CSG Holding

Assuming the 90 days trading horizon Shandong Polymer Biochemicals is expected to generate 0.99 times more return on investment than CSG Holding. However, Shandong Polymer Biochemicals is 1.01 times less risky than CSG Holding. It trades about 0.13 of its potential returns per unit of risk. CSG Holding Co is currently generating about -0.12 per unit of risk. If you would invest  412.00  in Shandong Polymer Biochemicals on December 25, 2024 and sell it today you would earn a total of  56.00  from holding Shandong Polymer Biochemicals or generate 13.59% return on investment over 90 days.

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

Shandong Polymer Biochemicals  vs.  CSG Holding Co

Shandong Polymer Bio

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Polymer Biochemicals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Polymer sustained solid returns over the last few months and may actually be approaching a breakup point.

CSG Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSG Holding Co 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.

Pair Trading with Shandong Polymer and CSG Holding

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

The idea behind Shandong Polymer Biochemicals and CSG Holding Co 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.