Correlation Between Shenzhen Bingchuan and MayAir Technology

Can any of the company-specific risk be diversified away by investing in both Shenzhen Bingchuan and MayAir Technology 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 MayAir Technology 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 MayAir Technology Co, you can compare the effects of market volatilities on Shenzhen Bingchuan and MayAir Technology 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 MayAir Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Bingchuan and MayAir Technology.

Diversification Opportunities for Shenzhen Bingchuan and MayAir Technology

0.42

Correlation Coefficient

Shenzhen Bingchuan  MayAir Technology

Very weak diversification

The 3 months correlation between Shenzhen and MayAir is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bingchuan Network and MayAir Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MayAir Technology 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 MayAir Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MayAir Technology has no effect on the direction of Shenzhen Bingchuan i.e., Shenzhen Bingchuan and MayAir Technology go up and down completely randomly.

Pair Corralation between Shenzhen Bingchuan and MayAir Technology

Assuming the 90 days trading horizon Shenzhen Bingchuan Network is expected to under-perform the MayAir Technology. In addition to that, Shenzhen Bingchuan is 2.4 times more volatile than MayAir Technology Co. It trades about -0.13 of its total potential returns per unit of risk. MayAir Technology Co is currently generating about -0.17 per unit of volatility. If you would invest  3,674  in MayAir Technology Co on September 25, 2024 and sell it today you would lose (234.00) from holding MayAir Technology Co or give up 6.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Shenzhen Bingchuan Network  vs.  MayAir Technology Co

Shenzhen Bingchuan

Risk-Adjusted Performance

11 of 100

Good

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

MayAir Technology

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Shenzhen Bingchuan and MayAir Technology

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

The idea behind Shenzhen Bingchuan Network and MayAir Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.