Correlation Between Shenzhen Kexin and Shenzhen Fortune

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

Diversification Opportunities for Shenzhen Kexin and Shenzhen Fortune

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Shenzhen and Shenzhen is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Kexin Communication and Shenzhen Fortune Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Fortune Trend 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 Fortune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Fortune Trend has no effect on the direction of Shenzhen Kexin i.e., Shenzhen Kexin and Shenzhen Fortune go up and down completely randomly.

Pair Corralation between Shenzhen Kexin and Shenzhen Fortune

Assuming the 90 days trading horizon Shenzhen Kexin Communication is expected to generate 1.03 times more return on investment than Shenzhen Fortune. However, Shenzhen Kexin is 1.03 times more volatile than Shenzhen Fortune Trend. It trades about -0.02 of its potential returns per unit of risk. Shenzhen Fortune Trend is currently generating about -0.16 per unit of risk. If you would invest  1,337  in Shenzhen Kexin Communication on October 24, 2024 and sell it today you would lose (38.00) from holding Shenzhen Kexin Communication or give up 2.84% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Shenzhen Kexin Communication  vs.  Shenzhen Fortune Trend

 Performance 
       Timeline  
Shenzhen Kexin Commu 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Shenzhen Fortune Trend 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Fortune Trend are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Fortune sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Kexin and Shenzhen Fortune Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shenzhen Kexin and Shenzhen Fortune

The main advantage of trading using opposite Shenzhen Kexin and Shenzhen Fortune positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Kexin position performs unexpectedly, Shenzhen Fortune 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 Fortune will offset losses from the drop in Shenzhen Fortune's long position.
The idea behind Shenzhen Kexin Communication and Shenzhen Fortune Trend 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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