Correlation Between Shandong Publishing and Lepu Medical

Can any of the company-specific risk be diversified away by investing in both Shandong Publishing and Lepu Medical 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 Lepu Medical 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 Lepu Medical Tech, you can compare the effects of market volatilities on Shandong Publishing and Lepu Medical 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 Lepu Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Publishing and Lepu Medical.

Diversification Opportunities for Shandong Publishing and Lepu Medical

-0.04

Correlation Coefficient

Shandong Publishing  Lepu Medical

Good diversification

The 3 months correlation between Shandong and Lepu is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Publishing Media and Lepu Medical Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepu Medical Tech 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 Lepu Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepu Medical Tech has no effect on the direction of Shandong Publishing i.e., Shandong Publishing and Lepu Medical go up and down completely randomly.

Pair Corralation between Shandong Publishing and Lepu Medical

Assuming the 90 days trading horizon Shandong Publishing Media is expected to under-perform the Lepu Medical. But the stock apears to be less risky and, when comparing its historical volatility, Shandong Publishing Media is 1.46 times less risky than Lepu Medical. The stock trades about -0.34 of its potential returns per unit of risk. The Lepu Medical Tech is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,201  in Lepu Medical Tech on December 26, 2024 and sell it today you would lose (47.00) from holding Lepu Medical Tech or give up 3.91% 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.  Lepu Medical Tech

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lepu Medical Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lepu Medical Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lepu Medical 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 Lepu Medical

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

The idea behind Shandong Publishing Media and Lepu Medical Tech 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..