Correlation Between Shanghai Jinfeng and Allwin Telecommunicatio

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

By analyzing existing cross correlation between Shanghai Jinfeng Wine and Allwin Telecommunication Co, you can compare the effects of market volatilities on Shanghai Jinfeng and Allwin Telecommunicatio 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 Jinfeng with a short position of Allwin Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Jinfeng and Allwin Telecommunicatio.

Diversification Opportunities for Shanghai Jinfeng and Allwin Telecommunicatio

0.76

Correlation Coefficient

Shanghai Jinfeng  Allwin Telecommunicatio

Poor diversification

The 3 months correlation between Shanghai and Allwin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Jinfeng Wine and Allwin Telecommunication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allwin Telecommunicatio and Shanghai Jinfeng 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 Jinfeng Wine are associated (or correlated) with Allwin Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allwin Telecommunicatio has no effect on the direction of Shanghai Jinfeng i.e., Shanghai Jinfeng and Allwin Telecommunicatio go up and down completely randomly.

Pair Corralation between Shanghai Jinfeng and Allwin Telecommunicatio

Assuming the 90 days trading horizon Shanghai Jinfeng Wine is expected to generate 0.72 times more return on investment than Allwin Telecommunicatio. However, Shanghai Jinfeng Wine is 1.38 times less risky than Allwin Telecommunicatio. It trades about 0.03 of its potential returns per unit of risk. Allwin Telecommunication Co is currently generating about 0.01 per unit of risk. If you would invest  567.00  in Shanghai Jinfeng Wine on October 1, 2024 and sell it today you would earn a total of  15.00  from holding Shanghai Jinfeng Wine or generate 2.65% return on investment over 90 days.

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

Shanghai Jinfeng Wine  vs.  Allwin Telecommunication Co

Shanghai Jinfeng Wine

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Jinfeng Wine are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Jinfeng may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Allwin Telecommunicatio

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Shanghai Jinfeng and Allwin Telecommunicatio

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

The idea behind Shanghai Jinfeng Wine and Allwin Telecommunication 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.