Correlation Between Shenzhen Glory and SGSG Sciencetechnolog

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

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

Diversification Opportunities for Shenzhen Glory and SGSG Sciencetechnolog

0.59

Correlation Coefficient

Shenzhen Glory  SGSG Sciencetechnolog

Very weak diversification

The 3 months correlation between Shenzhen and SGSG is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Glory Medical and SGSG Sciencetechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGSG Sciencetechnology and Shenzhen Glory 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 Glory Medical are associated (or correlated) with SGSG Sciencetechnolog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGSG Sciencetechnology has no effect on the direction of Shenzhen Glory i.e., Shenzhen Glory and SGSG Sciencetechnolog go up and down completely randomly.

Pair Corralation between Shenzhen Glory and SGSG Sciencetechnolog

Assuming the 90 days trading horizon Shenzhen Glory Medical is expected to under-perform the SGSG Sciencetechnolog. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Glory Medical is 1.99 times less risky than SGSG Sciencetechnolog. The stock trades about -0.02 of its potential returns per unit of risk. The SGSG Sciencetechnology Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,105  in SGSG Sciencetechnology Co on October 9, 2024 and sell it today you would earn a total of  3,837  from holding SGSG Sciencetechnology Co or generate 347.24% return on investment over 90 days.

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

Shenzhen Glory Medical  vs.  SGSG Sciencetechnology Co

Shenzhen Glory Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

SGSG Sciencetechnology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SGSG Sciencetechnology Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SGSG Sciencetechnolog sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Glory and SGSG Sciencetechnolog

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

The idea behind Shenzhen Glory Medical and SGSG Sciencetechnology 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.