Correlation Between CIMC Vehicles and Shenzhen

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

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

Diversification Opportunities for CIMC Vehicles and Shenzhen

0.38

Correlation Coefficient

CIMC Vehicles  Shenzhen

Weak diversification

The 3 months correlation between CIMC and Shenzhen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CIMC Vehicles Co and Shenzhen AV Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen AV Display and CIMC Vehicles 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 CIMC Vehicles Co are associated (or correlated) with Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen AV Display has no effect on the direction of CIMC Vehicles i.e., CIMC Vehicles and Shenzhen go up and down completely randomly.

Pair Corralation between CIMC Vehicles and Shenzhen

Assuming the 90 days trading horizon CIMC Vehicles is expected to generate 1.35 times less return on investment than Shenzhen. But when comparing it to its historical volatility, CIMC Vehicles Co is 1.3 times less risky than Shenzhen. It trades about 0.02 of its potential returns per unit of risk. Shenzhen AV Display Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,978  in Shenzhen AV Display Co on October 26, 2024 and sell it today you would earn a total of  206.00  from holding Shenzhen AV Display Co or generate 6.92% return on investment over 90 days.

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

CIMC Vehicles Co  vs.  Shenzhen AV Display Co

CIMC Vehicles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIMC Vehicles Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Shenzhen AV Display

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, 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 CIMC Vehicles and Shenzhen

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

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