Correlation Between Guangdong Silvere and Shuhua Sports

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

By analyzing existing cross correlation between Guangdong Silvere Sci and Shuhua Sports Co, you can compare the effects of market volatilities on Guangdong Silvere and Shuhua Sports 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 Guangdong Silvere with a short position of Shuhua Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Silvere and Shuhua Sports.

Diversification Opportunities for Guangdong Silvere and Shuhua Sports

0.4

Correlation Coefficient

Guangdong Silvere  Shuhua Sports

Very weak diversification

The 3 months correlation between Guangdong and Shuhua is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Silvere Sci and Shuhua Sports Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shuhua Sports and Guangdong Silvere 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 Guangdong Silvere Sci are associated (or correlated) with Shuhua Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shuhua Sports has no effect on the direction of Guangdong Silvere i.e., Guangdong Silvere and Shuhua Sports go up and down completely randomly.

Pair Corralation between Guangdong Silvere and Shuhua Sports

Assuming the 90 days trading horizon Guangdong Silvere Sci is expected to generate 1.29 times more return on investment than Shuhua Sports. However, Guangdong Silvere is 1.29 times more volatile than Shuhua Sports Co. It trades about 0.01 of its potential returns per unit of risk. Shuhua Sports Co is currently generating about 0.01 per unit of risk. If you would invest  584.00  in Guangdong Silvere Sci on October 10, 2024 and sell it today you would lose (41.00) from holding Guangdong Silvere Sci or give up 7.02% of portfolio value over 90 days.

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

Guangdong Silvere Sci  vs.  Shuhua Sports Co

Guangdong Silvere Sci

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangdong Silvere Sci 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.

Shuhua Sports

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shuhua Sports Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shuhua Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangdong Silvere and Shuhua Sports

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

The idea behind Guangdong Silvere Sci and Shuhua Sports Co 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.