Correlation Between Shenzhen SDG and Nanjing Canatal

Can any of the company-specific risk be diversified away by investing in both Shenzhen SDG and Nanjing Canatal 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 SDG and Nanjing Canatal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen SDG Service and Nanjing Canatal Data, you can compare the effects of market volatilities on Shenzhen SDG and Nanjing Canatal 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 SDG with a short position of Nanjing Canatal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen SDG and Nanjing Canatal.

Diversification Opportunities for Shenzhen SDG and Nanjing Canatal

-0.45

Correlation Coefficient

Shenzhen SDG  Nanjing Canatal

Very good diversification

The 3 months correlation between Shenzhen and Nanjing is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen SDG Service and Nanjing Canatal Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Canatal Data and Shenzhen SDG 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 SDG Service are associated (or correlated) with Nanjing Canatal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Canatal Data has no effect on the direction of Shenzhen SDG i.e., Shenzhen SDG and Nanjing Canatal go up and down completely randomly.

Pair Corralation between Shenzhen SDG and Nanjing Canatal

Assuming the 90 days trading horizon Shenzhen SDG Service is expected to under-perform the Nanjing Canatal. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen SDG Service is 1.0 times less risky than Nanjing Canatal. The stock trades about -0.05 of its potential returns per unit of risk. The Nanjing Canatal Data is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  717.00  in Nanjing Canatal Data on October 24, 2024 and sell it today you would earn a total of  110.00  from holding Nanjing Canatal Data or generate 15.34% return on investment over 90 days.

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

Shenzhen SDG Service  vs.  Nanjing Canatal Data

Shenzhen SDG Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen SDG Service 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.

Nanjing Canatal Data

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Canatal Data are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Canatal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen SDG and Nanjing Canatal

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

The idea behind Shenzhen SDG Service and Nanjing Canatal Data 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.