Correlation Between Shenzhen Zhongzhuang and Shenzhen Kexin

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Can any of the company-specific risk be diversified away by investing in both Shenzhen Zhongzhuang and Shenzhen Kexin 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 Zhongzhuang and Shenzhen Kexin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenzhen Zhongzhuang Construction and Shenzhen Kexin Communication, you can compare the effects of market volatilities on Shenzhen Zhongzhuang and Shenzhen Kexin 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 Zhongzhuang with a short position of Shenzhen Kexin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Zhongzhuang and Shenzhen Kexin.

Diversification Opportunities for Shenzhen Zhongzhuang and Shenzhen Kexin

ShenzhenShenzhenDiversified AwayShenzhenShenzhenDiversified Away100%
-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Shenzhen and Shenzhen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Zhongzhuang Construct and Shenzhen Kexin Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Kexin Commu and Shenzhen Zhongzhuang 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 Zhongzhuang Construction are associated (or correlated) with Shenzhen Kexin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Kexin Commu has no effect on the direction of Shenzhen Zhongzhuang i.e., Shenzhen Zhongzhuang and Shenzhen Kexin go up and down completely randomly.

Pair Corralation between Shenzhen Zhongzhuang and Shenzhen Kexin

Assuming the 90 days trading horizon Shenzhen Zhongzhuang Construction is expected to generate 1.05 times more return on investment than Shenzhen Kexin. However, Shenzhen Zhongzhuang is 1.05 times more volatile than Shenzhen Kexin Communication. It trades about 0.21 of its potential returns per unit of risk. Shenzhen Kexin Communication is currently generating about -0.12 per unit of risk. If you would invest  247.00  in Shenzhen Zhongzhuang Construction on October 31, 2024 and sell it today you would earn a total of  133.00  from holding Shenzhen Zhongzhuang Construction or generate 53.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Shenzhen Zhongzhuang Construct  vs.  Shenzhen Kexin Communication

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 050100
JavaScript chart by amCharts 3.21.15002822 300565
       Timeline  
Shenzhen Zhongzhuang 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Zhongzhuang Construction are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Zhongzhuang sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanJan33.544.5
Shenzhen Kexin Commu 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shenzhen Kexin Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanJan1112131415161718

Shenzhen Zhongzhuang and Shenzhen Kexin Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.53-7.89-5.24-2.60.03.06.059.1112.16 0.0150.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15002822 300565
       Returns  

Pair Trading with Shenzhen Zhongzhuang and Shenzhen Kexin

The main advantage of trading using opposite Shenzhen Zhongzhuang and Shenzhen Kexin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Zhongzhuang position performs unexpectedly, Shenzhen Kexin 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 Shenzhen Kexin will offset losses from the drop in Shenzhen Kexin's long position.
The idea behind Shenzhen Zhongzhuang Construction and Shenzhen Kexin Communication 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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