Correlation Between Shanghai Commercial and Shin Ruenn

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

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

Diversification Opportunities for Shanghai Commercial and Shin Ruenn

0.37

Correlation Coefficient

Shanghai Commercial  Shin Ruenn

Weak diversification

The 3 months correlation between Shanghai and Shin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Commercial Savings and Shin Ruenn Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Ruenn Development and Shanghai Commercial 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 Shanghai Commercial Savings are associated (or correlated) with Shin Ruenn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Ruenn Development has no effect on the direction of Shanghai Commercial i.e., Shanghai Commercial and Shin Ruenn go up and down completely randomly.

Pair Corralation between Shanghai Commercial and Shin Ruenn

Assuming the 90 days trading horizon Shanghai Commercial is expected to generate 1.22 times less return on investment than Shin Ruenn. But when comparing it to its historical volatility, Shanghai Commercial Savings is 1.43 times less risky than Shin Ruenn. It trades about 0.13 of its potential returns per unit of risk. Shin Ruenn Development is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,130  in Shin Ruenn Development on December 23, 2024 and sell it today you would earn a total of  610.00  from holding Shin Ruenn Development or generate 9.95% return on investment over 90 days.

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

Shanghai Commercial Savings  vs.  Shin Ruenn Development

Shanghai Commercial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Commercial Savings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shanghai Commercial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shin Ruenn Development

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Ruenn Development are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shin Ruenn may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shanghai Commercial and Shin Ruenn

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

The idea behind Shanghai Commercial Savings and Shin Ruenn Development 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.