Correlation Between Wuhan Hvsen and Shenyu Communication

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

By analyzing existing cross correlation between Wuhan Hvsen Biotechnology and Shenyu Communication Technology, you can compare the effects of market volatilities on Wuhan Hvsen and Shenyu Communication 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 Wuhan Hvsen with a short position of Shenyu Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Hvsen and Shenyu Communication.

Diversification Opportunities for Wuhan Hvsen and Shenyu Communication

-0.08

Correlation Coefficient

Wuhan Hvsen  Shenyu Communication

Good diversification

The 3 months correlation between Wuhan and Shenyu is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Hvsen Biotechnology and Shenyu Communication Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyu Communication and Wuhan Hvsen 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 Wuhan Hvsen Biotechnology are associated (or correlated) with Shenyu Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyu Communication has no effect on the direction of Wuhan Hvsen i.e., Wuhan Hvsen and Shenyu Communication go up and down completely randomly.

Pair Corralation between Wuhan Hvsen and Shenyu Communication

Assuming the 90 days trading horizon Wuhan Hvsen Biotechnology is expected to under-perform the Shenyu Communication. But the stock apears to be less risky and, when comparing its historical volatility, Wuhan Hvsen Biotechnology is 2.05 times less risky than Shenyu Communication. The stock trades about -0.02 of its potential returns per unit of risk. The Shenyu Communication Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,570  in Shenyu Communication Technology on October 25, 2024 and sell it today you would earn a total of  383.00  from holding Shenyu Communication Technology or generate 6.88% return on investment over 90 days.

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

Wuhan Hvsen Biotechnology  vs.  Shenyu Communication Technolog

Wuhan Hvsen Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shenyu Communication

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Wuhan Hvsen and Shenyu Communication

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

The idea behind Wuhan Hvsen Biotechnology and Shenyu Communication Technology 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.