Correlation Between Servyou Software and AVIC Heavy

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

Diversification Opportunities for Servyou Software and AVIC Heavy

0.84

Correlation Coefficient

Servyou Software  AVIC Heavy

Very poor diversification

The 3 months correlation between Servyou and AVIC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Servyou Software Group and AVIC Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVIC Heavy Machinery 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 AVIC Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVIC Heavy Machinery has no effect on the direction of Servyou Software i.e., Servyou Software and AVIC Heavy go up and down completely randomly.

Pair Corralation between Servyou Software and AVIC Heavy

Assuming the 90 days trading horizon Servyou Software Group is expected to generate 1.2 times more return on investment than AVIC Heavy. However, Servyou Software is 1.2 times more volatile than AVIC Heavy Machinery. It trades about 0.18 of its potential returns per unit of risk. AVIC Heavy Machinery is currently generating about 0.1 per unit of risk. If you would invest  2,367  in Servyou Software Group on September 5, 2024 and sell it today you would earn a total of  1,013  from holding Servyou Software Group or generate 42.8% return on investment over 90 days.

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

Servyou Software Group  vs.  AVIC Heavy Machinery

Servyou Software

Risk-Adjusted Performance

13 of 100

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.

AVIC Heavy Machinery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Heavy Machinery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AVIC Heavy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Servyou Software and AVIC Heavy

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

The idea behind Servyou Software Group and AVIC Heavy Machinery 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.