Correlation Between Sharetronic Data and Changchun Engley

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

Diversification Opportunities for Sharetronic Data and Changchun Engley

0.36

Correlation Coefficient

Sharetronic Data  Changchun Engley

Weak diversification

The 3 months correlation between Sharetronic and Changchun is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sharetronic Data Technology and Changchun Engley Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun Engley Aut 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 Changchun Engley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun Engley Aut has no effect on the direction of Sharetronic Data i.e., Sharetronic Data and Changchun Engley go up and down completely randomly.

Pair Corralation between Sharetronic Data and Changchun Engley

Assuming the 90 days trading horizon Sharetronic Data Technology is expected to generate 1.63 times more return on investment than Changchun Engley. However, Sharetronic Data is 1.63 times more volatile than Changchun Engley Automobile. It trades about 0.14 of its potential returns per unit of risk. Changchun Engley Automobile is currently generating about -0.01 per unit of risk. If you would invest  7,390  in Sharetronic Data Technology on October 10, 2024 and sell it today you would earn a total of  3,029  from holding Sharetronic Data Technology or generate 40.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sharetronic Data Technology  vs.  Changchun Engley Automobile

Sharetronic Data Tec

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sharetronic Data Technology are ranked lower than 11 (%) 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.

Changchun Engley Aut

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changchun Engley Automobile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Changchun Engley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sharetronic Data and Changchun Engley

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

The idea behind Sharetronic Data Technology and Changchun Engley Automobile 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.