Correlation Between Shijiazhuang Tonhe and East Money

Can any of the company-specific risk be diversified away by investing in both Shijiazhuang Tonhe and East Money 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 Shijiazhuang Tonhe and East Money into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shijiazhuang Tonhe Electronics and East Money Information, you can compare the effects of market volatilities on Shijiazhuang Tonhe and East Money 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 Shijiazhuang Tonhe with a short position of East Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shijiazhuang Tonhe and East Money.

Diversification Opportunities for Shijiazhuang Tonhe and East Money

0.29

Correlation Coefficient

Shijiazhuang Tonhe  East Money

Modest diversification

The 3 months correlation between Shijiazhuang and East is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shijiazhuang Tonhe Electronics and East Money Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Money Information and Shijiazhuang Tonhe 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 Shijiazhuang Tonhe Electronics are associated (or correlated) with East Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Money Information has no effect on the direction of Shijiazhuang Tonhe i.e., Shijiazhuang Tonhe and East Money go up and down completely randomly.

Pair Corralation between Shijiazhuang Tonhe and East Money

Assuming the 90 days trading horizon Shijiazhuang Tonhe is expected to generate 2.45 times less return on investment than East Money. In addition to that, Shijiazhuang Tonhe is 1.26 times more volatile than East Money Information. It trades about 0.01 of its total potential returns per unit of risk. East Money Information is currently generating about 0.03 per unit of volatility. If you would invest  1,814  in East Money Information on October 26, 2024 and sell it today you would earn a total of  595.00  from holding East Money Information or generate 32.8% return on investment over 90 days.

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

Shijiazhuang Tonhe Electronics  vs.  East Money Information

Shijiazhuang Tonhe

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shijiazhuang Tonhe Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shijiazhuang Tonhe may actually be approaching a critical reversion point that can send shares even higher in February 2025.

East Money Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in East Money Information are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, East Money may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shijiazhuang Tonhe and East Money

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

The idea behind Shijiazhuang Tonhe Electronics and East Money Information 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.