Correlation Between Cinda Securities and Shanghai Suochen

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

Diversification Opportunities for Cinda Securities and Shanghai Suochen

0.66

Correlation Coefficient

Cinda Securities  Shanghai Suochen

Poor diversification

The 3 months correlation between Cinda and Shanghai is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cinda Securities Co and Shanghai Suochen Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Suochen Inf 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 Shanghai Suochen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Suochen Inf has no effect on the direction of Cinda Securities i.e., Cinda Securities and Shanghai Suochen go up and down completely randomly.

Pair Corralation between Cinda Securities and Shanghai Suochen

Assuming the 90 days trading horizon Cinda Securities Co is expected to under-perform the Shanghai Suochen. But the stock apears to be less risky and, when comparing its historical volatility, Cinda Securities Co is 2.04 times less risky than Shanghai Suochen. The stock trades about -0.35 of its potential returns per unit of risk. The Shanghai Suochen Information is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,920  in Shanghai Suochen Information on October 27, 2024 and sell it today you would earn a total of  443.00  from holding Shanghai Suochen Information or generate 7.48% return on investment over 90 days.

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

Cinda Securities Co  vs.  Shanghai Suochen Information

Cinda Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cinda Securities Co 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.

Shanghai Suochen Inf

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Suochen Information are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Suochen may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cinda Securities and Shanghai Suochen

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

The idea behind Cinda Securities Co and Shanghai Suochen Information 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.