Correlation Between Shenzhen Hans and Infore Environment

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

By analyzing existing cross correlation between Shenzhen Hans CNC and Infore Environment Technology, you can compare the effects of market volatilities on Shenzhen Hans and Infore Environment 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 Hans with a short position of Infore Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Hans and Infore Environment.

Diversification Opportunities for Shenzhen Hans and Infore Environment

0.72

Correlation Coefficient

Shenzhen Hans  Infore Environment

Poor diversification

The 3 months correlation between Shenzhen and Infore is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Hans CNC and Infore Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infore Environment and Shenzhen Hans 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 Hans CNC are associated (or correlated) with Infore Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infore Environment has no effect on the direction of Shenzhen Hans i.e., Shenzhen Hans and Infore Environment go up and down completely randomly.

Pair Corralation between Shenzhen Hans and Infore Environment

Assuming the 90 days trading horizon Shenzhen Hans is expected to generate 3.43 times less return on investment than Infore Environment. But when comparing it to its historical volatility, Shenzhen Hans CNC is 1.6 times less risky than Infore Environment. It trades about 0.05 of its potential returns per unit of risk. Infore Environment Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  502.00  in Infore Environment Technology on December 26, 2024 and sell it today you would earn a total of  96.00  from holding Infore Environment Technology or generate 19.12% return on investment over 90 days.

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

Shenzhen Hans CNC  vs.  Infore Environment Technology

Shenzhen Hans CNC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Hans CNC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Hans may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Infore Environment

Risk-Adjusted Performance

OK

Over the last 90 days Infore Environment Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Infore Environment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Hans and Infore Environment

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

The idea behind Shenzhen Hans CNC and Infore Environment Technology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.