Correlation Between Song Shang and Cayenne Entertainment

Can any of the company-specific risk be diversified away by investing in both Song Shang and Cayenne Entertainment 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 Song Shang and Cayenne Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Song Shang Electronics and Cayenne Entertainment Technology, you can compare the effects of market volatilities on Song Shang and Cayenne Entertainment 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 Song Shang with a short position of Cayenne Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Shang and Cayenne Entertainment.

Diversification Opportunities for Song Shang and Cayenne Entertainment

-0.11

Correlation Coefficient

Song Shang  Cayenne Entertainment

Good diversification

The 3 months correlation between Song and Cayenne is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Song Shang Electronics and Cayenne Entertainment Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayenne Entertainment and Song Shang 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 Song Shang Electronics are associated (or correlated) with Cayenne Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayenne Entertainment has no effect on the direction of Song Shang i.e., Song Shang and Cayenne Entertainment go up and down completely randomly.

Pair Corralation between Song Shang and Cayenne Entertainment

Assuming the 90 days trading horizon Song Shang Electronics is expected to under-perform the Cayenne Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Song Shang Electronics is 1.31 times less risky than Cayenne Entertainment. The stock trades about -0.17 of its potential returns per unit of risk. The Cayenne Entertainment Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,825  in Cayenne Entertainment Technology on October 26, 2024 and sell it today you would earn a total of  45.00  from holding Cayenne Entertainment Technology or generate 1.18% return on investment over 90 days.

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

Song Shang Electronics  vs.  Cayenne Entertainment Technolo

Song Shang Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Song Shang Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cayenne Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cayenne Entertainment Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cayenne Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Song Shang and Cayenne Entertainment

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

The idea behind Song Shang Electronics and Cayenne Entertainment Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.