Correlation Between Shenzhen Hans and Pylon Technologies

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

Diversification Opportunities for Shenzhen Hans and Pylon Technologies

0.64

Correlation Coefficient

Shenzhen Hans  Pylon Technologies

Poor diversification

The 3 months correlation between Shenzhen and Pylon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Hans CNC and Pylon Technologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pylon Technologies 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 Pylon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pylon Technologies has no effect on the direction of Shenzhen Hans i.e., Shenzhen Hans and Pylon Technologies go up and down completely randomly.

Pair Corralation between Shenzhen Hans and Pylon Technologies

Assuming the 90 days trading horizon Shenzhen Hans CNC is expected to generate 1.06 times more return on investment than Pylon Technologies. However, Shenzhen Hans is 1.06 times more volatile than Pylon Technologies Co. It trades about 0.04 of its potential returns per unit of risk. Pylon Technologies Co is currently generating about -0.02 per unit of risk. If you would invest  3,864  in Shenzhen Hans CNC on December 26, 2024 and sell it today you would earn a total of  159.00  from holding Shenzhen Hans CNC or generate 4.11% 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.  Pylon Technologies Co

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 strong basic indicators, Shenzhen Hans is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pylon Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pylon Technologies Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Pylon Technologies 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 Hans and Pylon Technologies

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

The idea behind Shenzhen Hans CNC and Pylon Technologies 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.