Correlation Between Shenzhen Glory and Allgens Medical

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

Diversification Opportunities for Shenzhen Glory and Allgens Medical

0.69

Correlation Coefficient

Shenzhen Glory  Allgens Medical

Poor diversification

The 3 months correlation between Shenzhen and Allgens is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Glory Medical and Allgens Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allgens Medical Tech 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 Allgens Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allgens Medical Tech has no effect on the direction of Shenzhen Glory i.e., Shenzhen Glory and Allgens Medical go up and down completely randomly.

Pair Corralation between Shenzhen Glory and Allgens Medical

Assuming the 90 days trading horizon Shenzhen Glory Medical is expected to under-perform the Allgens Medical. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Glory Medical is 1.02 times less risky than Allgens Medical. The stock trades about -0.36 of its potential returns per unit of risk. The Allgens Medical Technology is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,793  in Allgens Medical Technology on October 11, 2024 and sell it today you would lose (116.00) from holding Allgens Medical Technology or give up 6.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Shenzhen Glory Medical  vs.  Allgens Medical Technology

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.

Allgens Medical Tech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allgens Medical Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Allgens Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shenzhen Glory and Allgens Medical

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

The idea behind Shenzhen Glory Medical and Allgens Medical Technology 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.