Correlation Between Cinda Securities and Shenzhen Overseas

Can any of the company-specific risk be diversified away by investing in both Cinda Securities and Shenzhen Overseas 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 Cinda Securities and Shenzhen Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cinda Securities Co and Shenzhen Overseas Chinese, you can compare the effects of market volatilities on Cinda Securities and Shenzhen Overseas 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 Cinda Securities with a short position of Shenzhen Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cinda Securities and Shenzhen Overseas.

Diversification Opportunities for Cinda Securities and Shenzhen Overseas

0.89

Correlation Coefficient

Cinda Securities  Shenzhen Overseas

Very poor diversification

The 3 months correlation between Cinda and Shenzhen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cinda Securities Co and Shenzhen Overseas Chinese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Overseas Chinese and Cinda Securities 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 Cinda Securities Co are associated (or correlated) with Shenzhen Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Overseas Chinese has no effect on the direction of Cinda Securities i.e., Cinda Securities and Shenzhen Overseas go up and down completely randomly.

Pair Corralation between Cinda Securities and Shenzhen Overseas

Assuming the 90 days trading horizon Cinda Securities Co is expected to under-perform the Shenzhen Overseas. But the stock apears to be less risky and, when comparing its historical volatility, Cinda Securities Co is 1.04 times less risky than Shenzhen Overseas. The stock trades about 0.0 of its potential returns per unit of risk. The Shenzhen Overseas Chinese is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  305.00  in Shenzhen Overseas Chinese on September 19, 2024 and sell it today you would lose (14.00) from holding Shenzhen Overseas Chinese or give up 4.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.58%
Values	Daily Returns

Cinda Securities Co  vs.  Shenzhen Overseas Chinese

Cinda Securities

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cinda Securities Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cinda Securities sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Overseas Chinese

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Overseas Chinese are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Overseas sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cinda Securities and Shenzhen Overseas

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

The idea behind Cinda Securities Co and Shenzhen Overseas Chinese 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.