Correlation Between Sharetronic Data and Suzhou Longway

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

By analyzing existing cross correlation between Sharetronic Data Technology and Suzhou Longway Electronic, you can compare the effects of market volatilities on Sharetronic Data and Suzhou Longway 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 Sharetronic Data with a short position of Suzhou Longway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sharetronic Data and Suzhou Longway.

Diversification Opportunities for Sharetronic Data and Suzhou Longway

0.43

Correlation Coefficient

Sharetronic Data  Suzhou Longway

Very weak diversification

The 3 months correlation between Sharetronic and Suzhou is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sharetronic Data Technology and Suzhou Longway Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Longway Electronic and Sharetronic Data 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 Sharetronic Data Technology are associated (or correlated) with Suzhou Longway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Longway Electronic has no effect on the direction of Sharetronic Data i.e., Sharetronic Data and Suzhou Longway go up and down completely randomly.

Pair Corralation between Sharetronic Data and Suzhou Longway

Assuming the 90 days trading horizon Sharetronic Data Technology is expected to generate 0.88 times more return on investment than Suzhou Longway. However, Sharetronic Data Technology is 1.13 times less risky than Suzhou Longway. It trades about 0.11 of its potential returns per unit of risk. Suzhou Longway Electronic is currently generating about 0.06 per unit of risk. If you would invest  7,790  in Sharetronic Data Technology on October 26, 2024 and sell it today you would earn a total of  2,190  from holding Sharetronic Data Technology or generate 28.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Sharetronic Data Technology  vs.  Suzhou Longway Electronic

Sharetronic Data Tec

Risk-Adjusted Performance

8 of 100

OK

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

Suzhou Longway Electronic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Suzhou Longway Electronic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suzhou Longway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sharetronic Data and Suzhou Longway

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

The idea behind Sharetronic Data Technology and Suzhou Longway Electronic 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.