Correlation Between Shenzhen Shenbao and 159681

Can any of the company-specific risk be diversified away by investing in both Shenzhen Shenbao and 159681 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 Shenbao and 159681 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen Shenbao Industrial and 159681, you can compare the effects of market volatilities on Shenzhen Shenbao and 159681 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 Shenbao with a short position of 159681. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Shenbao and 159681.

Diversification Opportunities for Shenzhen Shenbao and 159681

0.04

Correlation Coefficient

Shenzhen Shenbao  159681

Significant diversification

The 3 months correlation between Shenzhen and 159681 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Shenbao Industrial and 159681 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 159681 and Shenzhen Shenbao 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 Shenbao Industrial are associated (or correlated) with 159681. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 159681 has no effect on the direction of Shenzhen Shenbao i.e., Shenzhen Shenbao and 159681 go up and down completely randomly.

Pair Corralation between Shenzhen Shenbao and 159681

Assuming the 90 days trading horizon Shenzhen Shenbao Industrial is expected to generate 0.32 times more return on investment than 159681. However, Shenzhen Shenbao Industrial is 3.13 times less risky than 159681. It trades about -0.06 of its potential returns per unit of risk. 159681 is currently generating about -0.03 per unit of risk. If you would invest  339.00  in Shenzhen Shenbao Industrial on December 26, 2024 and sell it today you would lose (7.00) from holding Shenzhen Shenbao Industrial or give up 2.06% of portfolio value over 90 days.

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

Shenzhen Shenbao Industrial  vs.  159681

Shenzhen Shenbao Ind

Risk-Adjusted Performance

Very Weak

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

159681

Risk-Adjusted Performance

Very Weak

Over the last 90 days 159681 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 159681 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shenzhen Shenbao and 159681

The main advantage of trading using opposite Shenzhen Shenbao and 159681 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Shenbao position performs unexpectedly, 159681 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 159681 will offset losses from the drop in 159681's long position.

The idea behind Shenzhen Shenbao Industrial and 159681 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.