Correlation Between Agricultural Bank and Shanghai Rightongene

Can any of the company-specific risk be diversified away by investing in both Agricultural Bank and Shanghai Rightongene 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 Agricultural Bank and Shanghai Rightongene into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agricultural Bank of and Shanghai Rightongene Biotechnology, you can compare the effects of market volatilities on Agricultural Bank and Shanghai Rightongene 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 Agricultural Bank with a short position of Shanghai Rightongene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agricultural Bank and Shanghai Rightongene.

Diversification Opportunities for Agricultural Bank and Shanghai Rightongene

-0.01

Correlation Coefficient

Agricultural Bank  Shanghai Rightongene

Good diversification

The 3 months correlation between Agricultural and Shanghai is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank of and Shanghai Rightongene Biotechno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Rightongene and Agricultural Bank 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 Agricultural Bank of are associated (or correlated) with Shanghai Rightongene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Rightongene has no effect on the direction of Agricultural Bank i.e., Agricultural Bank and Shanghai Rightongene go up and down completely randomly.

Pair Corralation between Agricultural Bank and Shanghai Rightongene

Assuming the 90 days trading horizon Agricultural Bank of is expected to under-perform the Shanghai Rightongene. But the stock apears to be less risky and, when comparing its historical volatility, Agricultural Bank of is 2.01 times less risky than Shanghai Rightongene. The stock trades about -0.07 of its potential returns per unit of risk. The Shanghai Rightongene Biotechnology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,881  in Shanghai Rightongene Biotechnology on December 29, 2024 and sell it today you would earn a total of  265.00  from holding Shanghai Rightongene Biotechnology or generate 14.09% return on investment over 90 days.

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

Agricultural Bank of  vs.  Shanghai Rightongene Biotechno

Agricultural Bank

Risk-Adjusted Performance

Very Weak

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

Shanghai Rightongene

Risk-Adjusted Performance

OK

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

Pair Trading with Agricultural Bank and Shanghai Rightongene

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

The idea behind Agricultural Bank of and Shanghai Rightongene Biotechnology 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.