Correlation Between Shaanxi Broadcast and Advanced Technology

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Can any of the company-specific risk be diversified away by investing in both Shaanxi Broadcast and Advanced Technology 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 Shaanxi Broadcast and Advanced Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shaanxi Broadcast TV and Advanced Technology Materials, you can compare the effects of market volatilities on Shaanxi Broadcast and Advanced Technology 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 Shaanxi Broadcast with a short position of Advanced Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Broadcast and Advanced Technology.

Diversification Opportunities for Shaanxi Broadcast and Advanced Technology

ShaanxiAdvancedDiversified AwayShaanxiAdvancedDiversified Away100%
0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Shaanxi and Advanced is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Broadcast TV and Advanced Technology Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Technology and Shaanxi Broadcast 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 Shaanxi Broadcast TV are associated (or correlated) with Advanced Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Technology has no effect on the direction of Shaanxi Broadcast i.e., Shaanxi Broadcast and Advanced Technology go up and down completely randomly.

Pair Corralation between Shaanxi Broadcast and Advanced Technology

Assuming the 90 days trading horizon Shaanxi Broadcast is expected to generate 13.44 times less return on investment than Advanced Technology. But when comparing it to its historical volatility, Shaanxi Broadcast TV is 1.3 times less risky than Advanced Technology. It trades about 0.0 of its potential returns per unit of risk. Advanced Technology Materials is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,108  in Advanced Technology Materials on November 20, 2024 and sell it today you would earn a total of  56.00  from holding Advanced Technology Materials or generate 5.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Shaanxi Broadcast TV  vs.  Advanced Technology Materials

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-5051015
JavaScript chart by amCharts 3.21.15600831 000969
       Timeline  
Shaanxi Broadcast 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Shaanxi Broadcast TV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shaanxi Broadcast is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.32.42.52.62.72.82.933.1
Advanced Technology 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Technology Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Advanced Technology may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10.51111.51212.51313.51414.5

Shaanxi Broadcast and Advanced Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.68-5.75-3.82-1.90.011.93.835.767.69 0.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15600831 000969
       Returns  

Pair Trading with Shaanxi Broadcast and Advanced Technology

The main advantage of trading using opposite Shaanxi Broadcast and Advanced Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaanxi Broadcast position performs unexpectedly, Advanced Technology 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 Advanced Technology will offset losses from the drop in Advanced Technology's long position.
The idea behind Shaanxi Broadcast TV and Advanced Technology Materials 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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