Correlation Between Shenzhen Silver and Vontron Technology

Can any of the company-specific risk be diversified away by investing in both Shenzhen Silver and Vontron Technology 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 Silver and Vontron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen Silver Basis and Vontron Technology Co, you can compare the effects of market volatilities on Shenzhen Silver and Vontron Technology 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 Silver with a short position of Vontron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Silver and Vontron Technology.

Diversification Opportunities for Shenzhen Silver and Vontron Technology

0.64

Correlation Coefficient

Shenzhen Silver  Vontron Technology

Poor diversification

The 3 months correlation between Shenzhen and Vontron is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Silver Basis and Vontron Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontron Technology and Shenzhen Silver 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 Silver Basis are associated (or correlated) with Vontron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontron Technology has no effect on the direction of Shenzhen Silver i.e., Shenzhen Silver and Vontron Technology go up and down completely randomly.

Pair Corralation between Shenzhen Silver and Vontron Technology

Assuming the 90 days trading horizon Shenzhen Silver Basis is expected to under-perform the Vontron Technology. In addition to that, Shenzhen Silver is 1.89 times more volatile than Vontron Technology Co. It trades about -0.11 of its total potential returns per unit of risk. Vontron Technology Co is currently generating about -0.02 per unit of volatility. If you would invest  910.00  in Vontron Technology Co on September 25, 2024 and sell it today you would lose (8.00) from holding Vontron Technology Co or give up 0.88% of portfolio value over 90 days.

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

Shenzhen Silver Basis  vs.  Vontron Technology Co

Shenzhen Silver Basis

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Silver Basis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Silver sustained solid returns over the last few months and may actually be approaching a breakup point.

Vontron Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vontron Technology Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vontron Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Silver and Vontron Technology

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

The idea behind Shenzhen Silver Basis and Vontron Technology 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.