Correlation Between Shenzhen Glory and Grandblue Environment

Can any of the company-specific risk be diversified away by investing in both Shenzhen Glory and Grandblue Environment 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 Grandblue Environment 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 Grandblue Environment Co, you can compare the effects of market volatilities on Shenzhen Glory and Grandblue Environment 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 Grandblue Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Glory and Grandblue Environment.

Diversification Opportunities for Shenzhen Glory and Grandblue Environment

0.39

Correlation Coefficient

Shenzhen Glory  Grandblue Environment

Weak diversification

The 3 months correlation between Shenzhen and Grandblue is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Glory Medical and Grandblue Environment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandblue Environment 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 Grandblue Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandblue Environment has no effect on the direction of Shenzhen Glory i.e., Shenzhen Glory and Grandblue Environment go up and down completely randomly.

Pair Corralation between Shenzhen Glory and Grandblue Environment

Assuming the 90 days trading horizon Shenzhen Glory Medical is expected to under-perform the Grandblue Environment. In addition to that, Shenzhen Glory is 1.94 times more volatile than Grandblue Environment Co. It trades about -0.02 of its total potential returns per unit of risk. Grandblue Environment Co is currently generating about 0.05 per unit of volatility. If you would invest  1,806  in Grandblue Environment Co on September 29, 2024 and sell it today you would earn a total of  534.00  from holding Grandblue Environment Co or generate 29.57% return on investment over 90 days.

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

Shenzhen Glory Medical  vs.  Grandblue Environment Co

Shenzhen Glory Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Glory Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Grandblue Environment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grandblue Environment Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grandblue Environment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shenzhen Glory and Grandblue Environment

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

The idea behind Shenzhen Glory Medical and Grandblue Environment 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.