Correlation Between Bank of Suzhou and Soochow Securities

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

Diversification Opportunities for Bank of Suzhou and Soochow Securities

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bank and Soochow is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Suzhou and Soochow Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soochow Securities and Bank of Suzhou 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 Bank of Suzhou are associated (or correlated) with Soochow Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soochow Securities has no effect on the direction of Bank of Suzhou i.e., Bank of Suzhou and Soochow Securities go up and down completely randomly.

Pair Corralation between Bank of Suzhou and Soochow Securities

Assuming the 90 days trading horizon Bank of Suzhou is expected to generate 0.65 times more return on investment than Soochow Securities. However, Bank of Suzhou is 1.54 times less risky than Soochow Securities. It trades about -0.02 of its potential returns per unit of risk. Soochow Securities Co is currently generating about -0.3 per unit of risk. If you would invest  794.00  in Bank of Suzhou on October 8, 2024 and sell it today you would lose (4.00) from holding Bank of Suzhou or give up 0.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bank of Suzhou  vs.  Soochow Securities Co

 Performance 
       Timeline  
Bank of Suzhou 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Soochow Securities Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bank of Suzhou and Soochow Securities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank of Suzhou and Soochow Securities

The main advantage of trading using opposite Bank of Suzhou and Soochow Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Suzhou position performs unexpectedly, Soochow Securities 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 Soochow Securities will offset losses from the drop in Soochow Securities' long position.
The idea behind Bank of Suzhou and Soochow Securities 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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