Correlation Between Industrial and Suzhou Cheersson

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

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

Diversification Opportunities for Industrial and Suzhou Cheersson

0.15

Correlation Coefficient

Industrial  Suzhou Cheersson

Average diversification

The 3 months correlation between Industrial and Suzhou is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Suzhou Cheersson Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Cheersson Pre and Industrial 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 Industrial and Commercial are associated (or correlated) with Suzhou Cheersson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Cheersson Pre has no effect on the direction of Industrial i.e., Industrial and Suzhou Cheersson go up and down completely randomly.

Pair Corralation between Industrial and Suzhou Cheersson

Assuming the 90 days trading horizon Industrial and Commercial is expected to generate 0.53 times more return on investment than Suzhou Cheersson. However, Industrial and Commercial is 1.87 times less risky than Suzhou Cheersson. It trades about -0.01 of its potential returns per unit of risk. Suzhou Cheersson Precision is currently generating about -0.03 per unit of risk. If you would invest  692.00  in Industrial and Commercial on December 27, 2024 and sell it today you would lose (9.00) from holding Industrial and Commercial or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Industrial and Commercial  vs.  Suzhou Cheersson Precision

Industrial and Commercial

Risk-Adjusted Performance

Very Weak

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

Suzhou Cheersson Pre

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Industrial and Suzhou Cheersson

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

The idea behind Industrial and Commercial and Suzhou Cheersson 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.