Correlation Between Shenzhen Zhongzhuang and Shaanxi Broadcast

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Shenzhen Zhongzhuang and Shaanxi Broadcast 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 Shaanxi Broadcast 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 Shaanxi Broadcast TV, you can compare the effects of market volatilities on Shenzhen Zhongzhuang and Shaanxi Broadcast 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 Shaanxi Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Zhongzhuang and Shaanxi Broadcast.

Diversification Opportunities for Shenzhen Zhongzhuang and Shaanxi Broadcast

ShenzhenShaanxiDiversified AwayShenzhenShaanxiDiversified Away100%
0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Shenzhen and Shaanxi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Zhongzhuang Construct and Shaanxi Broadcast TV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Broadcast 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 Shaanxi Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Broadcast has no effect on the direction of Shenzhen Zhongzhuang i.e., Shenzhen Zhongzhuang and Shaanxi Broadcast go up and down completely randomly.

Pair Corralation between Shenzhen Zhongzhuang and Shaanxi Broadcast

Assuming the 90 days trading horizon Shenzhen Zhongzhuang Construction is expected to generate 1.18 times more return on investment than Shaanxi Broadcast. However, Shenzhen Zhongzhuang is 1.18 times more volatile than Shaanxi Broadcast TV. It trades about 0.45 of its potential returns per unit of risk. Shaanxi Broadcast TV is currently generating about 0.25 per unit of risk. If you would invest  193.00  in Shenzhen Zhongzhuang Construction on September 15, 2024 and sell it today you would earn a total of  242.00  from holding Shenzhen Zhongzhuang Construction or generate 125.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Shenzhen Zhongzhuang Construct  vs.  Shaanxi Broadcast TV

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 050100
JavaScript chart by amCharts 3.21.15002822 600831
       Timeline  
Shenzhen Zhongzhuang 

Risk-Adjusted Performance

35 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Zhongzhuang Construction are ranked lower than 35 (%) 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 3.21.15OctNovDecNovDec22.533.544.5
Shaanxi Broadcast 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Shaanxi Broadcast TV are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaanxi Broadcast sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec22.22.42.62.833.2

Shenzhen Zhongzhuang and Shaanxi Broadcast Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.19-6.88-4.58-2.270.02.785.658.5211.3914.26 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15002822 600831
       Returns  

Pair Trading with Shenzhen Zhongzhuang and Shaanxi Broadcast

The main advantage of trading using opposite Shenzhen Zhongzhuang and Shaanxi Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Zhongzhuang position performs unexpectedly, Shaanxi Broadcast 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 Shaanxi Broadcast will offset losses from the drop in Shaanxi Broadcast's long position.
The idea behind Shenzhen Zhongzhuang Construction and Shaanxi Broadcast TV 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

Other Complementary Tools

Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas