Correlation Between Tianjin Hi and Shenzhen Zhongzhuang

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Can any of the company-specific risk be diversified away by investing in both Tianjin Hi and Shenzhen Zhongzhuang 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 Tianjin Hi and Shenzhen Zhongzhuang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tianjin Hi Tech Development and Shenzhen Zhongzhuang Construction, you can compare the effects of market volatilities on Tianjin Hi and Shenzhen Zhongzhuang 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 Tianjin Hi with a short position of Shenzhen Zhongzhuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tianjin Hi and Shenzhen Zhongzhuang.

Diversification Opportunities for Tianjin Hi and Shenzhen Zhongzhuang

TianjinShenzhenDiversified AwayTianjinShenzhenDiversified Away100%
0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Tianjin and Shenzhen is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Hi Tech Development and Shenzhen Zhongzhuang Construct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Zhongzhuang and Tianjin Hi 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 Tianjin Hi Tech Development are associated (or correlated) with Shenzhen Zhongzhuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Zhongzhuang has no effect on the direction of Tianjin Hi i.e., Tianjin Hi and Shenzhen Zhongzhuang go up and down completely randomly.

Pair Corralation between Tianjin Hi and Shenzhen Zhongzhuang

Assuming the 90 days trading horizon Tianjin Hi is expected to generate 1.63 times less return on investment than Shenzhen Zhongzhuang. But when comparing it to its historical volatility, Tianjin Hi Tech Development is 1.02 times less risky than Shenzhen Zhongzhuang. It trades about 0.04 of its potential returns per unit of risk. Shenzhen Zhongzhuang Construction is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  335.00  in Shenzhen Zhongzhuang Construction on November 19, 2024 and sell it today you would earn a total of  29.00  from holding Shenzhen Zhongzhuang Construction or generate 8.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.31%
ValuesDaily Returns

Tianjin Hi Tech Development  vs.  Shenzhen Zhongzhuang Construct

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020304050
JavaScript chart by amCharts 3.21.15600082 002822
       Timeline  
Tianjin Hi Tech 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Hi Tech Development are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tianjin Hi may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.62.833.23.43.6
Shenzhen Zhongzhuang 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Zhongzhuang Construction are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Zhongzhuang may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3.23.43.63.844.24.44.6

Tianjin Hi and Shenzhen Zhongzhuang Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.48-7.85-5.22-2.590.02.535.197.8610.5213.18 0.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15600082 002822
       Returns  

Pair Trading with Tianjin Hi and Shenzhen Zhongzhuang

The main advantage of trading using opposite Tianjin Hi and Shenzhen Zhongzhuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Hi position performs unexpectedly, Shenzhen Zhongzhuang 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 Shenzhen Zhongzhuang will offset losses from the drop in Shenzhen Zhongzhuang's long position.
The idea behind Tianjin Hi Tech Development and Shenzhen Zhongzhuang Construction 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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