Correlation Between Shandong Publishing and Yantai North

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

Diversification Opportunities for Shandong Publishing and Yantai North

-0.29

Correlation Coefficient

Shandong Publishing  Yantai North

Very good diversification

The 3 months correlation between Shandong and Yantai is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Publishing Media and Yantai North Andre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yantai North Andre 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 Yantai North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yantai North Andre has no effect on the direction of Shandong Publishing i.e., Shandong Publishing and Yantai North go up and down completely randomly.

Pair Corralation between Shandong Publishing and Yantai North

Assuming the 90 days trading horizon Shandong Publishing Media is expected to generate 0.83 times more return on investment than Yantai North. However, Shandong Publishing Media is 1.2 times less risky than Yantai North. It trades about 0.13 of its potential returns per unit of risk. Yantai North Andre is currently generating about 0.06 per unit of risk. If you would invest  1,038  in Shandong Publishing Media on September 25, 2024 and sell it today you would earn a total of  71.00  from holding Shandong Publishing Media or generate 6.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Shandong Publishing Media  vs.  Yantai North Andre

Shandong Publishing Media

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Shandong Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Yantai North Andre

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yantai North Andre are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yantai North sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shandong Publishing and Yantai North

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

The idea behind Shandong Publishing Media and Yantai North Andre 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.