Correlation Between Shaanxi Broadcast and Shanghai Friendess

Can any of the company-specific risk be diversified away by investing in both Shaanxi Broadcast and Shanghai Friendess 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 Shanghai Friendess 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 Shanghai Friendess Electronics, you can compare the effects of market volatilities on Shaanxi Broadcast and Shanghai Friendess 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 Shanghai Friendess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Broadcast and Shanghai Friendess.

Diversification Opportunities for Shaanxi Broadcast and Shanghai Friendess

-0.54

Correlation Coefficient

Shaanxi Broadcast  Shanghai Friendess

Excellent diversification

The 3 months correlation between Shaanxi and Shanghai is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Broadcast TV and Shanghai Friendess Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Friendess 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 Shanghai Friendess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Friendess has no effect on the direction of Shaanxi Broadcast i.e., Shaanxi Broadcast and Shanghai Friendess go up and down completely randomly.

Pair Corralation between Shaanxi Broadcast and Shanghai Friendess

Assuming the 90 days trading horizon Shaanxi Broadcast TV is expected to under-perform the Shanghai Friendess. In addition to that, Shaanxi Broadcast is 1.08 times more volatile than Shanghai Friendess Electronics. It trades about -0.34 of its total potential returns per unit of risk. Shanghai Friendess Electronics is currently generating about 0.1 per unit of volatility. If you would invest  18,187  in Shanghai Friendess Electronics on October 9, 2024 and sell it today you would earn a total of  852.00  from holding Shanghai Friendess Electronics or generate 4.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Shaanxi Broadcast TV  vs.  Shanghai Friendess Electronics

Shaanxi Broadcast

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shaanxi Broadcast TV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Shanghai Friendess

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai Friendess Electronics 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 Shaanxi Broadcast and Shanghai Friendess

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

The idea behind Shaanxi Broadcast TV and Shanghai Friendess Electronics 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.