Correlation Between Shenzhen AV-Display and Sportsoul

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

By analyzing existing cross correlation between Shenzhen AV Display Co and Sportsoul Co Ltd, you can compare the effects of market volatilities on Shenzhen AV-Display and Sportsoul 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 AV-Display with a short position of Sportsoul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen AV-Display and Sportsoul.

Diversification Opportunities for Shenzhen AV-Display and Sportsoul

0.57

Correlation Coefficient

Shenzhen AV-Display  Sportsoul

Very weak diversification

The 3 months correlation between Shenzhen and Sportsoul is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen AV Display Co and Sportsoul Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsoul and Shenzhen AV-Display 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 AV Display Co are associated (or correlated) with Sportsoul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsoul has no effect on the direction of Shenzhen AV-Display i.e., Shenzhen AV-Display and Sportsoul go up and down completely randomly.

Pair Corralation between Shenzhen AV-Display and Sportsoul

Assuming the 90 days trading horizon Shenzhen AV Display Co is expected to under-perform the Sportsoul. In addition to that, Shenzhen AV-Display is 1.12 times more volatile than Sportsoul Co Ltd. It trades about -0.09 of its total potential returns per unit of risk. Sportsoul Co Ltd is currently generating about 0.03 per unit of volatility. If you would invest  1,197  in Sportsoul Co Ltd on December 27, 2024 and sell it today you would earn a total of  36.00  from holding Sportsoul Co Ltd or generate 3.01% return on investment over 90 days.

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

Shenzhen AV Display Co  vs.  Sportsoul Co Ltd

Shenzhen AV Display

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen AV Display Co 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sportsoul

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sportsoul Co Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sportsoul is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shenzhen AV-Display and Sportsoul

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

The idea behind Shenzhen AV Display Co and Sportsoul Co Ltd 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.