Correlation Between Shenzhen Kexin and Shenzhen Hifuture

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

By analyzing existing cross correlation between Shenzhen Kexin Communication and Shenzhen Hifuture Electric, you can compare the effects of market volatilities on Shenzhen Kexin and Shenzhen Hifuture 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 Kexin with a short position of Shenzhen Hifuture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Kexin and Shenzhen Hifuture.

Diversification Opportunities for Shenzhen Kexin and Shenzhen Hifuture

-0.12

Correlation Coefficient

Shenzhen Kexin  Shenzhen Hifuture

Good diversification

The 3 months correlation between Shenzhen and Shenzhen is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Kexin Communication and Shenzhen Hifuture Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Hifuture and Shenzhen Kexin 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 Kexin Communication are associated (or correlated) with Shenzhen Hifuture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Hifuture has no effect on the direction of Shenzhen Kexin i.e., Shenzhen Kexin and Shenzhen Hifuture go up and down completely randomly.

Pair Corralation between Shenzhen Kexin and Shenzhen Hifuture

Assuming the 90 days trading horizon Shenzhen Kexin Communication is expected to generate 1.05 times more return on investment than Shenzhen Hifuture. However, Shenzhen Kexin is 1.05 times more volatile than Shenzhen Hifuture Electric. It trades about 0.0 of its potential returns per unit of risk. Shenzhen Hifuture Electric is currently generating about -0.03 per unit of risk. If you would invest  1,597  in Shenzhen Kexin Communication on September 4, 2024 and sell it today you would lose (218.00) from holding Shenzhen Kexin Communication or give up 13.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.58%
Values	Daily Returns

Shenzhen Kexin Communication  vs.  Shenzhen Hifuture Electric

Shenzhen Kexin Commu

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Kexin Communication are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Kexin sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Hifuture

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Hifuture Electric are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Hifuture sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Kexin and Shenzhen Hifuture

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

The idea behind Shenzhen Kexin Communication and Shenzhen Hifuture Electric 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.