Correlation Between Pureun Mutual and SH Energy

Can any of the company-specific risk be diversified away by investing in both Pureun Mutual and SH Energy 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 Pureun Mutual and SH Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pureun Mutual Savings and SH Energy Chemical, you can compare the effects of market volatilities on Pureun Mutual and SH Energy 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 Pureun Mutual with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pureun Mutual and SH Energy.

Diversification Opportunities for Pureun Mutual and SH Energy

0.03

Correlation Coefficient

Pureun Mutual  SH Energy

Significant diversification

The 3 months correlation between Pureun and 002360 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Pureun Mutual Savings and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and Pureun Mutual 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 Pureun Mutual Savings are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of Pureun Mutual i.e., Pureun Mutual and SH Energy go up and down completely randomly.

Pair Corralation between Pureun Mutual and SH Energy

Assuming the 90 days trading horizon Pureun Mutual Savings is expected to under-perform the SH Energy. But the stock apears to be less risky and, when comparing its historical volatility, Pureun Mutual Savings is 3.19 times less risky than SH Energy. The stock trades about -0.03 of its potential returns per unit of risk. The SH Energy Chemical is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  53,300  in SH Energy Chemical on October 22, 2024 and sell it today you would earn a total of  2,300  from holding SH Energy Chemical or generate 4.32% return on investment over 90 days.

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

Pureun Mutual Savings  vs.  SH Energy Chemical

Pureun Mutual Savings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pureun Mutual Savings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pureun Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SH Energy Chemical

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Pureun Mutual and SH Energy

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

The idea behind Pureun Mutual Savings and SH Energy Chemical 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.