Correlation Between Chenzhou Jingui and Shandong Polymer

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

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

Diversification Opportunities for Chenzhou Jingui and Shandong Polymer

0.82

Correlation Coefficient

Chenzhou Jingui  Shandong Polymer

Very poor diversification

The 3 months correlation between Chenzhou and Shandong is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Chenzhou Jingui Silver and Shandong Polymer Biochemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Polymer Bio and Chenzhou Jingui 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 Chenzhou Jingui Silver are associated (or correlated) with Shandong Polymer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Polymer Bio has no effect on the direction of Chenzhou Jingui i.e., Chenzhou Jingui and Shandong Polymer go up and down completely randomly.

Pair Corralation between Chenzhou Jingui and Shandong Polymer

Assuming the 90 days trading horizon Chenzhou Jingui Silver is expected to under-perform the Shandong Polymer. But the stock apears to be less risky and, when comparing its historical volatility, Chenzhou Jingui Silver is 1.05 times less risky than Shandong Polymer. The stock trades about -0.08 of its potential returns per unit of risk. The Shandong Polymer Biochemicals is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  479.00  in Shandong Polymer Biochemicals on December 2, 2024 and sell it today you would lose (43.00) from holding Shandong Polymer Biochemicals or give up 8.98% of portfolio value over 90 days.

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

Chenzhou Jingui Silver  vs.  Shandong Polymer Biochemicals

Chenzhou Jingui Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chenzhou Jingui Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Shandong Polymer Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Polymer Biochemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Chenzhou Jingui and Shandong Polymer

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

The idea behind Chenzhou Jingui Silver and Shandong Polymer Biochemicals 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.