Correlation Between Shenzhen Everwin and Vanfund Urban

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

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

Diversification Opportunities for Shenzhen Everwin and Vanfund Urban

0.51

Correlation Coefficient

Shenzhen Everwin  Vanfund Urban

Very weak diversification

The 3 months correlation between Shenzhen and Vanfund is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Everwin Precision and Vanfund Urban Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanfund Urban Investment and Shenzhen Everwin 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 Everwin Precision are associated (or correlated) with Vanfund Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanfund Urban Investment has no effect on the direction of Shenzhen Everwin i.e., Shenzhen Everwin and Vanfund Urban go up and down completely randomly.

Pair Corralation between Shenzhen Everwin and Vanfund Urban

Assuming the 90 days trading horizon Shenzhen Everwin Precision is expected to generate 1.17 times more return on investment than Vanfund Urban. However, Shenzhen Everwin is 1.17 times more volatile than Vanfund Urban Investment. It trades about 0.16 of its potential returns per unit of risk. Vanfund Urban Investment is currently generating about -0.07 per unit of risk. If you would invest  1,675  in Shenzhen Everwin Precision on October 25, 2024 and sell it today you would earn a total of  183.00  from holding Shenzhen Everwin Precision or generate 10.93% return on investment over 90 days.

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

Shenzhen Everwin Precision  vs.  Vanfund Urban Investment

Shenzhen Everwin Pre

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Everwin Precision are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Everwin sustained solid returns over the last few months and may actually be approaching a breakup point.

Vanfund Urban Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanfund Urban Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vanfund Urban 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 Everwin and Vanfund Urban

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

The idea behind Shenzhen Everwin Precision and Vanfund Urban Investment 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.