Correlation Between Hainan HNA and Shenzhen Dynanonic

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

By analyzing existing cross correlation between Hainan HNA Infrastructure and Shenzhen Dynanonic Co, you can compare the effects of market volatilities on Hainan HNA and Shenzhen Dynanonic 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 Hainan HNA with a short position of Shenzhen Dynanonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan HNA and Shenzhen Dynanonic.

Diversification Opportunities for Hainan HNA and Shenzhen Dynanonic

0.63

Correlation Coefficient

Hainan HNA  Shenzhen Dynanonic

Poor diversification

The 3 months correlation between Hainan and Shenzhen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hainan HNA Infrastructure and Shenzhen Dynanonic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Dynanonic and Hainan HNA 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 Hainan HNA Infrastructure are associated (or correlated) with Shenzhen Dynanonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Dynanonic has no effect on the direction of Hainan HNA i.e., Hainan HNA and Shenzhen Dynanonic go up and down completely randomly.

Pair Corralation between Hainan HNA and Shenzhen Dynanonic

Assuming the 90 days trading horizon Hainan HNA Infrastructure is expected to generate 0.56 times more return on investment than Shenzhen Dynanonic. However, Hainan HNA Infrastructure is 1.79 times less risky than Shenzhen Dynanonic. It trades about 0.02 of its potential returns per unit of risk. Shenzhen Dynanonic Co is currently generating about -0.04 per unit of risk. If you would invest  339.00  in Hainan HNA Infrastructure on October 15, 2024 and sell it today you would earn a total of  6.00  from holding Hainan HNA Infrastructure or generate 1.77% return on investment over 90 days.

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

Hainan HNA Infrastructure  vs.  Shenzhen Dynanonic Co

Hainan HNA Infrastructure

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan HNA Infrastructure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hainan HNA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shenzhen Dynanonic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Dynanonic Co 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.

Pair Trading with Hainan HNA and Shenzhen Dynanonic

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

The idea behind Hainan HNA Infrastructure and Shenzhen Dynanonic Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.