Correlation Between 159005 and Shandong Sanyuan

Can any of the company-specific risk be diversified away by investing in both 159005 and Shandong Sanyuan 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 159005 and Shandong Sanyuan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 159005 and Shandong Sanyuan Biotechnology, you can compare the effects of market volatilities on 159005 and Shandong Sanyuan 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 159005 with a short position of Shandong Sanyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of 159005 and Shandong Sanyuan.

Diversification Opportunities for 159005 and Shandong Sanyuan

-0.35

Correlation Coefficient

159005  Shandong Sanyuan

Very good diversification

The 3 months correlation between 159005 and Shandong is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding 159005 and Shandong Sanyuan Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sanyuan Bio and 159005 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 159005 are associated (or correlated) with Shandong Sanyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sanyuan Bio has no effect on the direction of 159005 i.e., 159005 and Shandong Sanyuan go up and down completely randomly.

Pair Corralation between 159005 and Shandong Sanyuan

Assuming the 90 days trading horizon 159005 is expected to generate 0.01 times more return on investment than Shandong Sanyuan. However, 159005 is 68.43 times less risky than Shandong Sanyuan. It trades about 0.22 of its potential returns per unit of risk. Shandong Sanyuan Biotechnology is currently generating about -0.47 per unit of risk. If you would invest  9,986  in 159005 on October 13, 2024 and sell it today you would earn a total of  14.00  from holding 159005 or generate 0.14% return on investment over 90 days.

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

159005  vs.  Shandong Sanyuan Biotechnology

159005

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 159005 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 159005 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shandong Sanyuan Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shandong Sanyuan Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with 159005 and Shandong Sanyuan

The main advantage of trading using opposite 159005 and Shandong Sanyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 159005 position performs unexpectedly, Shandong Sanyuan 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 Shandong Sanyuan will offset losses from the drop in Shandong Sanyuan's long position.

The idea behind 159005 and Shandong Sanyuan Biotechnology 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.