Correlation Between Shenzhen Changfang and Gotion High

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Can any of the company-specific risk be diversified away by investing in both Shenzhen Changfang and Gotion High 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 Changfang and Gotion High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenzhen Changfang Light and Gotion High tech, you can compare the effects of market volatilities on Shenzhen Changfang and Gotion High 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 Changfang with a short position of Gotion High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Changfang and Gotion High.

Diversification Opportunities for Shenzhen Changfang and Gotion High

ShenzhenGotionDiversified AwayShenzhenGotionDiversified Away100%
0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Shenzhen and Gotion is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Changfang Light and Gotion High tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotion High tech and Shenzhen Changfang 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 Changfang Light are associated (or correlated) with Gotion High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotion High tech has no effect on the direction of Shenzhen Changfang i.e., Shenzhen Changfang and Gotion High go up and down completely randomly.

Pair Corralation between Shenzhen Changfang and Gotion High

Assuming the 90 days trading horizon Shenzhen Changfang Light is expected to generate 1.49 times more return on investment than Gotion High. However, Shenzhen Changfang is 1.49 times more volatile than Gotion High tech. It trades about 0.15 of its potential returns per unit of risk. Gotion High tech is currently generating about -0.03 per unit of risk. If you would invest  142.00  in Shenzhen Changfang Light on October 11, 2024 and sell it today you would earn a total of  50.00  from holding Shenzhen Changfang Light or generate 35.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Shenzhen Changfang Light  vs.  Gotion High tech

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -100102030
JavaScript chart by amCharts 3.21.15300301 002074
       Timeline  
Shenzhen Changfang Light 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Changfang Light are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Changfang sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1.41.51.61.71.81.92
Gotion High tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gotion High tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gotion High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan20212223242526

Shenzhen Changfang and Gotion High Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.78-9.57-6.36-3.16-0.05353.36.710.1113.5216.93 0.010.020.030.04
JavaScript chart by amCharts 3.21.15300301 002074
       Returns  

Pair Trading with Shenzhen Changfang and Gotion High

The main advantage of trading using opposite Shenzhen Changfang and Gotion High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Changfang position performs unexpectedly, Gotion High 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 Gotion High will offset losses from the drop in Gotion High's long position.
The idea behind Shenzhen Changfang Light and Gotion High tech 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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