Correlation Between Inspur Software and Shengtak New

Can any of the company-specific risk be diversified away by investing in both Inspur Software and Shengtak New 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 Inspur Software and Shengtak New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inspur Software Co and Shengtak New Material, you can compare the effects of market volatilities on Inspur Software and Shengtak New 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 Inspur Software with a short position of Shengtak New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspur Software and Shengtak New.

Diversification Opportunities for Inspur Software and Shengtak New

0.85

Correlation Coefficient

Inspur Software  Shengtak New

Very poor diversification

The 3 months correlation between Inspur and Shengtak is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Inspur Software Co and Shengtak New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengtak New Material and Inspur Software 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 Inspur Software Co are associated (or correlated) with Shengtak New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengtak New Material has no effect on the direction of Inspur Software i.e., Inspur Software and Shengtak New go up and down completely randomly.

Pair Corralation between Inspur Software and Shengtak New

Assuming the 90 days trading horizon Inspur Software Co is expected to under-perform the Shengtak New. In addition to that, Inspur Software is 1.17 times more volatile than Shengtak New Material. It trades about -0.14 of its total potential returns per unit of risk. Shengtak New Material is currently generating about -0.16 per unit of volatility. If you would invest  3,796  in Shengtak New Material on October 26, 2024 and sell it today you would lose (863.00) from holding Shengtak New Material or give up 22.73% of portfolio value over 90 days.

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

Inspur Software Co  vs.  Shengtak New Material

Inspur Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspur Software 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.

Shengtak New Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shengtak New Material 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 Inspur Software and Shengtak New

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

The idea behind Inspur Software Co and Shengtak New Material 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.