Correlation Between Servyou Software and Ningbo Fangzheng

Can any of the company-specific risk be diversified away by investing in both Servyou Software and Ningbo Fangzheng 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 Ningbo Fangzheng 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 Ningbo Fangzheng Automobile, you can compare the effects of market volatilities on Servyou Software and Ningbo Fangzheng 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 Ningbo Fangzheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Servyou Software and Ningbo Fangzheng.

Diversification Opportunities for Servyou Software and Ningbo Fangzheng

0.73

Correlation Coefficient

Servyou Software  Ningbo Fangzheng

Poor diversification

The 3 months correlation between Servyou and Ningbo is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Servyou Software Group and Ningbo Fangzheng Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Fangzheng Aut 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 Ningbo Fangzheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Fangzheng Aut has no effect on the direction of Servyou Software i.e., Servyou Software and Ningbo Fangzheng go up and down completely randomly.

Pair Corralation between Servyou Software and Ningbo Fangzheng

Assuming the 90 days trading horizon Servyou Software Group is expected to generate 1.17 times more return on investment than Ningbo Fangzheng. However, Servyou Software is 1.17 times more volatile than Ningbo Fangzheng Automobile. It trades about 0.04 of its potential returns per unit of risk. Ningbo Fangzheng Automobile is currently generating about -0.04 per unit of risk. If you would invest  2,793  in Servyou Software Group on October 24, 2024 and sell it today you would earn a total of  146.00  from holding Servyou Software Group or generate 5.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Servyou Software Group  vs.  Ningbo Fangzheng Automobile

Servyou Software

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Servyou Software Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Servyou Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ningbo Fangzheng Aut

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ningbo Fangzheng Automobile 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 Ningbo Fangzheng

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

The idea behind Servyou Software Group and Ningbo Fangzheng Automobile 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.