Correlation Between Senci Electric and Shenzhen MTC

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Can any of the company-specific risk be diversified away by investing in both Senci Electric and Shenzhen MTC 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 Senci Electric and Shenzhen MTC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senci Electric Machinery and Shenzhen MTC Co, you can compare the effects of market volatilities on Senci Electric and Shenzhen MTC 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 Senci Electric with a short position of Shenzhen MTC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senci Electric and Shenzhen MTC.

Diversification Opportunities for Senci Electric and Shenzhen MTC

SenciShenzhenDiversified AwaySenciShenzhenDiversified Away100%
0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Senci and Shenzhen is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Senci Electric Machinery and Shenzhen MTC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen MTC and Senci Electric 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 Senci Electric Machinery are associated (or correlated) with Shenzhen MTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen MTC has no effect on the direction of Senci Electric i.e., Senci Electric and Shenzhen MTC go up and down completely randomly.

Pair Corralation between Senci Electric and Shenzhen MTC

Assuming the 90 days trading horizon Senci Electric Machinery is expected to generate 1.16 times more return on investment than Shenzhen MTC. However, Senci Electric is 1.16 times more volatile than Shenzhen MTC Co. It trades about 0.03 of its potential returns per unit of risk. Shenzhen MTC Co is currently generating about 0.03 per unit of risk. If you would invest  1,561  in Senci Electric Machinery on November 21, 2024 and sell it today you would earn a total of  456.00  from holding Senci Electric Machinery or generate 29.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.79%
ValuesDaily Returns

Senci Electric Machinery  vs.  Shenzhen MTC Co

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -5051015
JavaScript chart by amCharts 3.21.15603109 002429
       Timeline  
Senci Electric Machinery 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Senci Electric Machinery are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Senci Electric sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1516171819202122
Shenzhen MTC 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen MTC Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen MTC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb55.566.5

Senci Electric and Shenzhen MTC Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.83-6.61-4.4-2.180.02.294.657.019.3811.74 0.0200.0250.0300.0350.0400.045
JavaScript chart by amCharts 3.21.15603109 002429
       Returns  

Pair Trading with Senci Electric and Shenzhen MTC

The main advantage of trading using opposite Senci Electric and Shenzhen MTC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senci Electric position performs unexpectedly, Shenzhen MTC 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 MTC will offset losses from the drop in Shenzhen MTC's long position.
The idea behind Senci Electric Machinery and Shenzhen MTC Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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