Correlation Between Eyebright Medical and Shenzhen Glory

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

By analyzing existing cross correlation between Eyebright Medical Technology and Shenzhen Glory Medical, you can compare the effects of market volatilities on Eyebright Medical and Shenzhen Glory 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 Eyebright Medical with a short position of Shenzhen Glory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eyebright Medical and Shenzhen Glory.

Diversification Opportunities for Eyebright Medical and Shenzhen Glory

0.02

Correlation Coefficient

Eyebright Medical  Shenzhen Glory

Significant diversification

The 3 months correlation between Eyebright and Shenzhen is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Eyebright Medical Technology and Shenzhen Glory Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Glory Medical and Eyebright Medical 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 Eyebright Medical Technology are associated (or correlated) with Shenzhen Glory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Glory Medical has no effect on the direction of Eyebright Medical i.e., Eyebright Medical and Shenzhen Glory go up and down completely randomly.

Pair Corralation between Eyebright Medical and Shenzhen Glory

Assuming the 90 days trading horizon Eyebright Medical Technology is expected to under-perform the Shenzhen Glory. In addition to that, Eyebright Medical is 1.09 times more volatile than Shenzhen Glory Medical. It trades about -0.01 of its total potential returns per unit of risk. Shenzhen Glory Medical is currently generating about 0.0 per unit of volatility. If you would invest  299.00  in Shenzhen Glory Medical on October 9, 2024 and sell it today you would lose (11.00) from holding Shenzhen Glory Medical or give up 3.68% of portfolio value over 90 days.

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

Eyebright Medical Technology  vs.  Shenzhen Glory Medical

Eyebright Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shenzhen Glory Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eyebright Medical and Shenzhen Glory

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

The idea behind Eyebright Medical Technology and Shenzhen Glory Medical 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.