Correlation Between Shanghai Yaoji and Zhuzhou CRRC

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

By analyzing existing cross correlation between Shanghai Yaoji Playing and Zhuzhou CRRC Times, you can compare the effects of market volatilities on Shanghai Yaoji and Zhuzhou CRRC 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 Shanghai Yaoji with a short position of Zhuzhou CRRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Yaoji and Zhuzhou CRRC.

Diversification Opportunities for Shanghai Yaoji and Zhuzhou CRRC

0.1

Correlation Coefficient

Shanghai Yaoji  Zhuzhou CRRC

Average diversification

The 3 months correlation between Shanghai and Zhuzhou is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Yaoji Playing and Zhuzhou CRRC Times in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuzhou CRRC Times and Shanghai Yaoji 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 Shanghai Yaoji Playing are associated (or correlated) with Zhuzhou CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuzhou CRRC Times has no effect on the direction of Shanghai Yaoji i.e., Shanghai Yaoji and Zhuzhou CRRC go up and down completely randomly.

Pair Corralation between Shanghai Yaoji and Zhuzhou CRRC

Assuming the 90 days trading horizon Shanghai Yaoji Playing is expected to generate 1.43 times more return on investment than Zhuzhou CRRC. However, Shanghai Yaoji is 1.43 times more volatile than Zhuzhou CRRC Times. It trades about 0.05 of its potential returns per unit of risk. Zhuzhou CRRC Times is currently generating about 0.0 per unit of risk. If you would invest  1,431  in Shanghai Yaoji Playing on September 26, 2024 and sell it today you would earn a total of  1,271  from holding Shanghai Yaoji Playing or generate 88.82% return on investment over 90 days.

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

Shanghai Yaoji Playing  vs.  Zhuzhou CRRC Times

Shanghai Yaoji Playing

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Yaoji Playing are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Yaoji sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhuzhou CRRC Times

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Shanghai Yaoji and Zhuzhou CRRC

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

The idea behind Shanghai Yaoji Playing and Zhuzhou CRRC Times 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.