Correlation Between Chenzhou Jingui and HengFeng Information

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

Diversification Opportunities for Chenzhou Jingui and HengFeng Information

0.66

Correlation Coefficient

Chenzhou Jingui  HengFeng Information

Poor diversification

The 3 months correlation between Chenzhou and HengFeng is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chenzhou Jingui Silver and HengFeng Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HengFeng Information 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 HengFeng Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HengFeng Information has no effect on the direction of Chenzhou Jingui i.e., Chenzhou Jingui and HengFeng Information go up and down completely randomly.

Pair Corralation between Chenzhou Jingui and HengFeng Information

Assuming the 90 days trading horizon Chenzhou Jingui Silver is expected to generate 0.64 times more return on investment than HengFeng Information. However, Chenzhou Jingui Silver is 1.56 times less risky than HengFeng Information. It trades about -0.21 of its potential returns per unit of risk. HengFeng Information Technology is currently generating about -0.26 per unit of risk. If you would invest  387.00  in Chenzhou Jingui Silver on October 11, 2024 and sell it today you would lose (43.00) from holding Chenzhou Jingui Silver or give up 11.11% of portfolio value over 90 days.

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

Chenzhou Jingui Silver  vs.  HengFeng Information Technolog

Chenzhou Jingui Silver

Risk-Adjusted Performance

3 of 100

Insignificant

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

HengFeng Information

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Chenzhou Jingui and HengFeng Information

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

The idea behind Chenzhou Jingui Silver and HengFeng Information 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.