Correlation Between Shenzhen Bioeasy and Anhui Jianghuai

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

By analyzing existing cross correlation between Shenzhen Bioeasy Biotechnology and Anhui Jianghuai Automobile, you can compare the effects of market volatilities on Shenzhen Bioeasy and Anhui Jianghuai 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 Bioeasy with a short position of Anhui Jianghuai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Bioeasy and Anhui Jianghuai.

Diversification Opportunities for Shenzhen Bioeasy and Anhui Jianghuai

-0.23

Correlation Coefficient

Shenzhen Bioeasy  Anhui Jianghuai

Very good diversification

The 3 months correlation between Shenzhen and Anhui is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bioeasy Biotechnology and Anhui Jianghuai Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Jianghuai Auto and Shenzhen Bioeasy 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 Bioeasy Biotechnology are associated (or correlated) with Anhui Jianghuai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Jianghuai Auto has no effect on the direction of Shenzhen Bioeasy i.e., Shenzhen Bioeasy and Anhui Jianghuai go up and down completely randomly.

Pair Corralation between Shenzhen Bioeasy and Anhui Jianghuai

Assuming the 90 days trading horizon Shenzhen Bioeasy Biotechnology is expected to generate 1.05 times more return on investment than Anhui Jianghuai. However, Shenzhen Bioeasy is 1.05 times more volatile than Anhui Jianghuai Automobile. It trades about 0.01 of its potential returns per unit of risk. Anhui Jianghuai Automobile is currently generating about -0.1 per unit of risk. If you would invest  885.00  in Shenzhen Bioeasy Biotechnology on December 26, 2024 and sell it today you would lose (1.00) from holding Shenzhen Bioeasy Biotechnology or give up 0.11% of portfolio value over 90 days.

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

Shenzhen Bioeasy Biotechnology  vs.  Anhui Jianghuai Automobile

Shenzhen Bioeasy Bio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Bioeasy Biotechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen Bioeasy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Anhui Jianghuai Auto

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anhui Jianghuai Automobile 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.

Pair Trading with Shenzhen Bioeasy and Anhui Jianghuai

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

The idea behind Shenzhen Bioeasy Biotechnology and Anhui Jianghuai 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.