Correlation Between 360 Security and Suzhou Dongshan

Can any of the company-specific risk be diversified away by investing in both 360 Security and Suzhou Dongshan 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 360 Security and Suzhou Dongshan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 360 Security Technology and Suzhou Dongshan Precision, you can compare the effects of market volatilities on 360 Security and Suzhou Dongshan 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 360 Security with a short position of Suzhou Dongshan. Check out your portfolio center. Please also check ongoing floating volatility patterns of 360 Security and Suzhou Dongshan.

Diversification Opportunities for 360 Security and Suzhou Dongshan

0.26

Correlation Coefficient

360 Security  Suzhou Dongshan

Modest diversification

The 3 months correlation between 360 and Suzhou is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding 360 Security Technology and Suzhou Dongshan Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Dongshan Precision and 360 Security 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 360 Security Technology are associated (or correlated) with Suzhou Dongshan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Dongshan Precision has no effect on the direction of 360 Security i.e., 360 Security and Suzhou Dongshan go up and down completely randomly.

Pair Corralation between 360 Security and Suzhou Dongshan

Assuming the 90 days trading horizon 360 Security is expected to generate 3.21 times less return on investment than Suzhou Dongshan. In addition to that, 360 Security is 1.13 times more volatile than Suzhou Dongshan Precision. It trades about 0.02 of its total potential returns per unit of risk. Suzhou Dongshan Precision is currently generating about 0.06 per unit of volatility. If you would invest  2,530  in Suzhou Dongshan Precision on October 8, 2024 and sell it today you would earn a total of  299.00  from holding Suzhou Dongshan Precision or generate 11.82% return on investment over 90 days.

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

360 Security Technology  vs.  Suzhou Dongshan Precision

360 Security Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 360 Security Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 360 Security is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Suzhou Dongshan Precision

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Suzhou Dongshan Precision are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suzhou Dongshan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 360 Security and Suzhou Dongshan

The main advantage of trading using opposite 360 Security and Suzhou Dongshan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 360 Security position performs unexpectedly, Suzhou Dongshan 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 Suzhou Dongshan will offset losses from the drop in Suzhou Dongshan's long position.

The idea behind 360 Security Technology and Suzhou Dongshan Precision 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.