Correlation Between Senci Electric and Beijing Wandong

Can any of the company-specific risk be diversified away by investing in both Senci Electric and Beijing Wandong 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 Beijing Wandong 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 Beijing Wandong Medical, you can compare the effects of market volatilities on Senci Electric and Beijing Wandong 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 Beijing Wandong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senci Electric and Beijing Wandong.

Diversification Opportunities for Senci Electric and Beijing Wandong

0.0

Correlation Coefficient

Senci Electric  Beijing Wandong

Pay attention - limited upside

The 3 months correlation between Senci and Beijing is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Senci Electric Machinery and Beijing Wandong Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Wandong Medical 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 Beijing Wandong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Wandong Medical has no effect on the direction of Senci Electric i.e., Senci Electric and Beijing Wandong go up and down completely randomly.

Pair Corralation between Senci Electric and Beijing Wandong

If you would invest (100.00) in Senci Electric Machinery on October 5, 2024 and sell it today you would earn a total of  100.00  from holding Senci Electric Machinery or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Senci Electric Machinery  vs.  Beijing Wandong Medical

Senci Electric Machinery

Risk-Adjusted Performance

0 of 100

Modest

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

Beijing Wandong Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Senci Electric and Beijing Wandong

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

The idea behind Senci Electric Machinery and Beijing Wandong Medical 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.