Correlation Between Shenzhen Bioeasy and Nancal Energy

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

Diversification Opportunities for Shenzhen Bioeasy and Nancal Energy

0.36

Correlation Coefficient

Shenzhen Bioeasy  Nancal Energy

Weak diversification

The 3 months correlation between Shenzhen and Nancal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bioeasy Biotechnology and Nancal Energy Saving Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nancal Energy Saving 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 Nancal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nancal Energy Saving has no effect on the direction of Shenzhen Bioeasy i.e., Shenzhen Bioeasy and Nancal Energy go up and down completely randomly.

Pair Corralation between Shenzhen Bioeasy and Nancal Energy

Assuming the 90 days trading horizon Shenzhen Bioeasy Biotechnology is expected to under-perform the Nancal Energy. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Bioeasy Biotechnology is 1.29 times less risky than Nancal Energy. The stock trades about -0.16 of its potential returns per unit of risk. The Nancal Energy Saving Tech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,163  in Nancal Energy Saving Tech on October 25, 2024 and sell it today you would earn a total of  61.00  from holding Nancal Energy Saving Tech or generate 1.93% return on investment over 90 days.

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

Shenzhen Bioeasy Biotechnology  vs.  Nancal Energy Saving Tech

Shenzhen Bioeasy Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Bioeasy Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Nancal Energy Saving

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nancal Energy Saving Tech are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nancal Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Bioeasy and Nancal Energy

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

The idea behind Shenzhen Bioeasy Biotechnology and Nancal Energy Saving Tech 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.