Correlation Between Shenzhen Transsion and Jiangsu Broadcasting

Can any of the company-specific risk be diversified away by investing in both Shenzhen Transsion and Jiangsu Broadcasting 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 Shenzhen Transsion and Jiangsu Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen Transsion Holdings and Jiangsu Broadcasting Cable, you can compare the effects of market volatilities on Shenzhen Transsion and Jiangsu Broadcasting 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 Shenzhen Transsion with a short position of Jiangsu Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Transsion and Jiangsu Broadcasting.

Diversification Opportunities for Shenzhen Transsion and Jiangsu Broadcasting

-0.06

Correlation Coefficient

Shenzhen Transsion  Jiangsu Broadcasting

Good diversification

The 3 months correlation between Shenzhen and Jiangsu is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Transsion Holdings and Jiangsu Broadcasting Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Broadcasting and Shenzhen Transsion 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 Shenzhen Transsion Holdings are associated (or correlated) with Jiangsu Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Broadcasting has no effect on the direction of Shenzhen Transsion i.e., Shenzhen Transsion and Jiangsu Broadcasting go up and down completely randomly.

Pair Corralation between Shenzhen Transsion and Jiangsu Broadcasting

Assuming the 90 days trading horizon Shenzhen Transsion Holdings is expected to generate 1.18 times more return on investment than Jiangsu Broadcasting. However, Shenzhen Transsion is 1.18 times more volatile than Jiangsu Broadcasting Cable. It trades about -0.01 of its potential returns per unit of risk. Jiangsu Broadcasting Cable is currently generating about -0.08 per unit of risk. If you would invest  9,540  in Shenzhen Transsion Holdings on December 2, 2024 and sell it today you would lose (271.00) from holding Shenzhen Transsion Holdings or give up 2.84% of portfolio value over 90 days.

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

Shenzhen Transsion Holdings  vs.  Jiangsu Broadcasting Cable

Shenzhen Transsion

Risk-Adjusted Performance

Very Weak

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

Jiangsu Broadcasting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangsu Broadcasting Cable 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 Shenzhen Transsion and Jiangsu Broadcasting

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

The idea behind Shenzhen Transsion Holdings and Jiangsu Broadcasting Cable 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.