Correlation Between Shenzhen Kexin and Lushang Property

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

Diversification Opportunities for Shenzhen Kexin and Lushang Property

-0.33

Correlation Coefficient

Shenzhen Kexin  Lushang Property

Very good diversification

The 3 months correlation between Shenzhen and Lushang is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Kexin Communication and Lushang Property Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lushang Property 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 Lushang Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lushang Property has no effect on the direction of Shenzhen Kexin i.e., Shenzhen Kexin and Lushang Property go up and down completely randomly.

Pair Corralation between Shenzhen Kexin and Lushang Property

Assuming the 90 days trading horizon Shenzhen Kexin Communication is expected to under-perform the Lushang Property. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Kexin Communication is 1.2 times less risky than Lushang Property. The stock trades about -0.21 of its potential returns per unit of risk. The Lushang Property Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  715.00  in Lushang Property Co on October 7, 2024 and sell it today you would earn a total of  18.00  from holding Lushang Property Co or generate 2.52% return on investment over 90 days.

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

Shenzhen Kexin Communication  vs.  Lushang Property Co

Shenzhen Kexin Commu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Kexin Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lushang Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lushang Property Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Shenzhen Kexin and Lushang Property

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

The idea behind Shenzhen Kexin Communication and Lushang Property 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.