Correlation Between Shandong Sanyuan and Shanghai Rural

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

By analyzing existing cross correlation between Shandong Sanyuan Biotechnology and Shanghai Rural Commercial, you can compare the effects of market volatilities on Shandong Sanyuan and Shanghai Rural 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 Shandong Sanyuan with a short position of Shanghai Rural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Sanyuan and Shanghai Rural.

Diversification Opportunities for Shandong Sanyuan and Shanghai Rural

0.0

Correlation Coefficient

Shandong Sanyuan  Shanghai Rural

Pay attention - limited upside

The 3 months correlation between Shandong and Shanghai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Sanyuan Biotechnology and Shanghai Rural Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Rural Commercial and Shandong Sanyuan 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 Shandong Sanyuan Biotechnology are associated (or correlated) with Shanghai Rural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Rural Commercial has no effect on the direction of Shandong Sanyuan i.e., Shandong Sanyuan and Shanghai Rural go up and down completely randomly.

Pair Corralation between Shandong Sanyuan and Shanghai Rural

If you would invest (100.00) in Shanghai Rural Commercial on October 7, 2024 and sell it today you would earn a total of  100.00  from holding Shanghai Rural Commercial or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Shandong Sanyuan Biotechnology  vs.  Shanghai Rural Commercial

Shandong Sanyuan Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shandong Sanyuan Biotechnology 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shanghai Rural Commercial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Rural Commercial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Rural may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shandong Sanyuan and Shanghai Rural

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

The idea behind Shandong Sanyuan Biotechnology and Shanghai Rural Commercial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.