Correlation Between Shenzhen Bingchuan and Haoxiangni Jujube

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

By analyzing existing cross correlation between Shenzhen Bingchuan Network and Haoxiangni Jujube Co, you can compare the effects of market volatilities on Shenzhen Bingchuan and Haoxiangni Jujube 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 Bingchuan with a short position of Haoxiangni Jujube. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Bingchuan and Haoxiangni Jujube.

Diversification Opportunities for Shenzhen Bingchuan and Haoxiangni Jujube

0.48

Correlation Coefficient

Shenzhen Bingchuan  Haoxiangni Jujube

Very weak diversification

The 3 months correlation between Shenzhen and Haoxiangni is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bingchuan Network and Haoxiangni Jujube Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haoxiangni Jujube and Shenzhen Bingchuan 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 Bingchuan Network are associated (or correlated) with Haoxiangni Jujube. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haoxiangni Jujube has no effect on the direction of Shenzhen Bingchuan i.e., Shenzhen Bingchuan and Haoxiangni Jujube go up and down completely randomly.

Pair Corralation between Shenzhen Bingchuan and Haoxiangni Jujube

Assuming the 90 days trading horizon Shenzhen Bingchuan Network is expected to under-perform the Haoxiangni Jujube. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Bingchuan Network is 1.02 times less risky than Haoxiangni Jujube. The stock trades about -0.01 of its potential returns per unit of risk. The Haoxiangni Jujube Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  622.00  in Haoxiangni Jujube Co on October 8, 2024 and sell it today you would earn a total of  264.00  from holding Haoxiangni Jujube Co or generate 42.44% return on investment over 90 days.

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

Shenzhen Bingchuan Network  vs.  Haoxiangni Jujube Co

Shenzhen Bingchuan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Bingchuan Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shenzhen Bingchuan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Haoxiangni Jujube

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Haoxiangni Jujube Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haoxiangni Jujube sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Bingchuan and Haoxiangni Jujube

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

The idea behind Shenzhen Bingchuan Network and Haoxiangni Jujube 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.