Correlation Between XiAn Dagang and Shenzhen Noposion

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

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

Diversification Opportunities for XiAn Dagang and Shenzhen Noposion

-0.01

Correlation Coefficient

XiAn Dagang  Shenzhen Noposion

Good diversification

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

Pair Corralation between XiAn Dagang and Shenzhen Noposion

Assuming the 90 days trading horizon XiAn Dagang Road is expected to generate 1.54 times more return on investment than Shenzhen Noposion. However, XiAn Dagang is 1.54 times more volatile than Shenzhen Noposion Agrochemicals. It trades about 0.01 of its potential returns per unit of risk. Shenzhen Noposion Agrochemicals is currently generating about -0.1 per unit of risk. If you would invest  637.00  in XiAn Dagang Road on December 25, 2024 and sell it today you would lose (5.00) from holding XiAn Dagang Road or give up 0.78% of portfolio value over 90 days.

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

XiAn Dagang Road  vs.  Shenzhen Noposion Agrochemical

XiAn Dagang Road

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XiAn Dagang Road are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, XiAn Dagang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shenzhen Noposion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Noposion Agrochemicals 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with XiAn Dagang and Shenzhen Noposion

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

The idea behind XiAn Dagang Road and Shenzhen Noposion Agrochemicals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.