Correlation Between Cultural Investment and Shanghai Jinfeng

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

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

Diversification Opportunities for Cultural Investment and Shanghai Jinfeng

0.81

Correlation Coefficient

Cultural Investment  Shanghai Jinfeng

Very poor diversification

The 3 months correlation between Cultural and Shanghai is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and Shanghai Jinfeng Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Jinfeng Wine and Cultural Investment 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 Cultural Investment Holdings are associated (or correlated) with Shanghai Jinfeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Jinfeng Wine has no effect on the direction of Cultural Investment i.e., Cultural Investment and Shanghai Jinfeng go up and down completely randomly.

Pair Corralation between Cultural Investment and Shanghai Jinfeng

Assuming the 90 days trading horizon Cultural Investment Holdings is expected to under-perform the Shanghai Jinfeng. But the stock apears to be less risky and, when comparing its historical volatility, Cultural Investment Holdings is 1.17 times less risky than Shanghai Jinfeng. The stock trades about -0.07 of its potential returns per unit of risk. The Shanghai Jinfeng Wine is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  556.00  in Shanghai Jinfeng Wine on September 15, 2024 and sell it today you would earn a total of  160.00  from holding Shanghai Jinfeng Wine or generate 28.78% return on investment over 90 days.

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

Cultural Investment Holdings  vs.  Shanghai Jinfeng Wine

Cultural Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cultural Investment Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cultural Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Shanghai Jinfeng Wine

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Jinfeng Wine are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Jinfeng sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cultural Investment and Shanghai Jinfeng

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

The idea behind Cultural Investment Holdings and Shanghai Jinfeng Wine 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.