Correlation Between Hubei Geoway and Shenzhen MYS

Can any of the company-specific risk be diversified away by investing in both Hubei Geoway and Shenzhen MYS 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 Hubei Geoway and Shenzhen MYS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hubei Geoway Investment and Shenzhen MYS Environmental, you can compare the effects of market volatilities on Hubei Geoway and Shenzhen MYS 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 Hubei Geoway with a short position of Shenzhen MYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Geoway and Shenzhen MYS.

Diversification Opportunities for Hubei Geoway and Shenzhen MYS

0.56

Correlation Coefficient

Hubei Geoway  Shenzhen MYS

Very weak diversification

The 3 months correlation between Hubei and Shenzhen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Geoway Investment and Shenzhen MYS Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen MYS Environ and Hubei Geoway 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 Hubei Geoway Investment are associated (or correlated) with Shenzhen MYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen MYS Environ has no effect on the direction of Hubei Geoway i.e., Hubei Geoway and Shenzhen MYS go up and down completely randomly.

Pair Corralation between Hubei Geoway and Shenzhen MYS

Assuming the 90 days trading horizon Hubei Geoway Investment is expected to under-perform the Shenzhen MYS. In addition to that, Hubei Geoway is 1.08 times more volatile than Shenzhen MYS Environmental. It trades about -0.01 of its total potential returns per unit of risk. Shenzhen MYS Environmental is currently generating about 0.06 per unit of volatility. If you would invest  275.00  in Shenzhen MYS Environmental on September 20, 2024 and sell it today you would earn a total of  98.00  from holding Shenzhen MYS Environmental or generate 35.64% return on investment over 90 days.

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

Hubei Geoway Investment  vs.  Shenzhen MYS Environmental

Hubei Geoway Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Geoway Investment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Geoway sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen MYS Environ

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen MYS Environmental are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen MYS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hubei Geoway and Shenzhen MYS

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

The idea behind Hubei Geoway Investment and Shenzhen MYS Environmental 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.