Correlation Between Shandong Publishing and Invengo Information

Can any of the company-specific risk be diversified away by investing in both Shandong Publishing and Invengo Information 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 Shandong Publishing and Invengo Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shandong Publishing Media and Invengo Information Technology, you can compare the effects of market volatilities on Shandong Publishing and Invengo Information 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 Shandong Publishing with a short position of Invengo Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Publishing and Invengo Information.

Diversification Opportunities for Shandong Publishing and Invengo Information

-0.05

Correlation Coefficient

Shandong Publishing  Invengo Information

Good diversification

The 3 months correlation between Shandong and Invengo is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Publishing Media and Invengo Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invengo Information and Shandong Publishing 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 Shandong Publishing Media are associated (or correlated) with Invengo Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invengo Information has no effect on the direction of Shandong Publishing i.e., Shandong Publishing and Invengo Information go up and down completely randomly.

Pair Corralation between Shandong Publishing and Invengo Information

Assuming the 90 days trading horizon Shandong Publishing Media is expected to under-perform the Invengo Information. But the stock apears to be less risky and, when comparing its historical volatility, Shandong Publishing Media is 1.35 times less risky than Invengo Information. The stock trades about -0.11 of its potential returns per unit of risk. The Invengo Information Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  605.00  in Invengo Information Technology on December 27, 2024 and sell it today you would lose (1.00) from holding Invengo Information Technology or give up 0.17% of portfolio value over 90 days.

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

Shandong Publishing Media  vs.  Invengo Information Technology

Shandong Publishing Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Publishing Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Invengo Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invengo Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invengo Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shandong Publishing and Invengo Information

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

The idea behind Shandong Publishing Media and Invengo Information Technology 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..