Correlation Between Yili Chuanning and Shandong Sino

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

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

Diversification Opportunities for Yili Chuanning and Shandong Sino

0.5

Correlation Coefficient

Yili Chuanning  Shandong Sino

Very weak diversification

The 3 months correlation between Yili and Shandong is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Yili Chuanning Biotechnology and Shandong Sino Agri United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sino Agri and Yili Chuanning 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 Yili Chuanning Biotechnology are associated (or correlated) with Shandong Sino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sino Agri has no effect on the direction of Yili Chuanning i.e., Yili Chuanning and Shandong Sino go up and down completely randomly.

Pair Corralation between Yili Chuanning and Shandong Sino

Assuming the 90 days trading horizon Yili Chuanning Biotechnology is expected to generate 1.65 times more return on investment than Shandong Sino. However, Yili Chuanning is 1.65 times more volatile than Shandong Sino Agri United. It trades about 0.1 of its potential returns per unit of risk. Shandong Sino Agri United is currently generating about -0.08 per unit of risk. If you would invest  1,215  in Yili Chuanning Biotechnology on December 1, 2024 and sell it today you would earn a total of  64.00  from holding Yili Chuanning Biotechnology or generate 5.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Yili Chuanning Biotechnology  vs.  Shandong Sino Agri United

Yili Chuanning Biote

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yili Chuanning Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yili Chuanning is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shandong Sino Agri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Sino Agri United 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Yili Chuanning and Shandong Sino

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

The idea behind Yili Chuanning Biotechnology and Shandong Sino Agri United 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.