Correlation Between Servyou Software and Shenwan Hongyuan

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

By analyzing existing cross correlation between Servyou Software Group and Shenwan Hongyuan Group, you can compare the effects of market volatilities on Servyou Software and Shenwan Hongyuan 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 Servyou Software with a short position of Shenwan Hongyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Servyou Software and Shenwan Hongyuan.

Diversification Opportunities for Servyou Software and Shenwan Hongyuan

-0.08

Correlation Coefficient

Servyou Software  Shenwan Hongyuan

Good diversification

The 3 months correlation between Servyou and Shenwan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Servyou Software Group and Shenwan Hongyuan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenwan Hongyuan and Servyou Software 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 Servyou Software Group are associated (or correlated) with Shenwan Hongyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenwan Hongyuan has no effect on the direction of Servyou Software i.e., Servyou Software and Shenwan Hongyuan go up and down completely randomly.

Pair Corralation between Servyou Software and Shenwan Hongyuan

Assuming the 90 days trading horizon Servyou Software Group is expected to generate 2.76 times more return on investment than Shenwan Hongyuan. However, Servyou Software is 2.76 times more volatile than Shenwan Hongyuan Group. It trades about 0.17 of its potential returns per unit of risk. Shenwan Hongyuan Group is currently generating about -0.1 per unit of risk. If you would invest  3,096  in Servyou Software Group on December 25, 2024 and sell it today you would earn a total of  1,304  from holding Servyou Software Group or generate 42.12% return on investment over 90 days.

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

Servyou Software Group  vs.  Shenwan Hongyuan Group

Servyou Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Servyou Software Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Servyou Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenwan Hongyuan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenwan Hongyuan Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Servyou Software and Shenwan Hongyuan

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

The idea behind Servyou Software Group and Shenwan Hongyuan Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.