Correlation Between YoungQin International and Shinkong Synthetic

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

By analyzing existing cross correlation between YoungQin International Co and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on YoungQin International and Shinkong Synthetic 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 YoungQin International with a short position of Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of YoungQin International and Shinkong Synthetic.

Diversification Opportunities for YoungQin International and Shinkong Synthetic

0.01

Correlation Coefficient

YoungQin International  Shinkong Synthetic

Significant diversification

The 3 months correlation between YoungQin and Shinkong is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding YoungQin International Co and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber and YoungQin International 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 YoungQin International Co are associated (or correlated) with Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of YoungQin International i.e., YoungQin International and Shinkong Synthetic go up and down completely randomly.

Pair Corralation between YoungQin International and Shinkong Synthetic

Assuming the 90 days trading horizon YoungQin International Co is expected to generate 3.32 times more return on investment than Shinkong Synthetic. However, YoungQin International is 3.32 times more volatile than Shinkong Synthetic Fiber. It trades about 0.2 of its potential returns per unit of risk. Shinkong Synthetic Fiber is currently generating about -0.1 per unit of risk. If you would invest  10,000  in YoungQin International Co on December 2, 2024 and sell it today you would earn a total of  3,300  from holding YoungQin International Co or generate 33.0% return on investment over 90 days.

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

YoungQin International Co  vs.  Shinkong Synthetic Fiber

YoungQin International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YoungQin International Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, YoungQin International showed solid returns over the last few months and may actually be approaching a breakup point.

Shinkong Synthetic Fiber

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shinkong Synthetic Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shinkong Synthetic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with YoungQin International and Shinkong Synthetic

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

The idea behind YoungQin International Co and Shinkong Synthetic Fiber 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.