Correlation Between Shenzhen AV-Display and Penghua Shenzhen

Can any of the company-specific risk be diversified away by investing in both Shenzhen AV-Display and Penghua Shenzhen 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 Penghua Shenzhen 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 Penghua Shenzhen Energy, you can compare the effects of market volatilities on Shenzhen AV-Display and Penghua Shenzhen 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 Penghua Shenzhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen AV-Display and Penghua Shenzhen.

Diversification Opportunities for Shenzhen AV-Display and Penghua Shenzhen

-0.07

Correlation Coefficient

Shenzhen AV-Display  Penghua Shenzhen

Good diversification

The 3 months correlation between Shenzhen and Penghua is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen AV Display Co and Penghua Shenzhen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penghua Shenzhen Energy 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 Penghua Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penghua Shenzhen Energy has no effect on the direction of Shenzhen AV-Display i.e., Shenzhen AV-Display and Penghua Shenzhen go up and down completely randomly.

Pair Corralation between Shenzhen AV-Display and Penghua Shenzhen

Assuming the 90 days trading horizon Shenzhen AV Display Co is expected to under-perform the Penghua Shenzhen. In addition to that, Shenzhen AV-Display is 5.0 times more volatile than Penghua Shenzhen Energy. It trades about -0.09 of its total potential returns per unit of risk. Penghua Shenzhen Energy is currently generating about 0.19 per unit of volatility. If you would invest  633.00  in Penghua Shenzhen Energy on December 27, 2024 and sell it today you would earn a total of  34.00  from holding Penghua Shenzhen Energy or generate 5.37% return on investment over 90 days.

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

Shenzhen AV Display Co  vs.  Penghua Shenzhen Energy

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.

Penghua Shenzhen Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Penghua Shenzhen Energy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Penghua Shenzhen 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 Penghua Shenzhen

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

The idea behind Shenzhen AV Display Co and Penghua Shenzhen Energy 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.