Correlation Between Shanghai Sanyou and Shanghai Yaoji

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Can any of the company-specific risk be diversified away by investing in both Shanghai Sanyou and Shanghai Yaoji 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 Shanghai Sanyou and Shanghai Yaoji into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Sanyou Medical and Shanghai Yaoji Playing, you can compare the effects of market volatilities on Shanghai Sanyou and Shanghai Yaoji 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 Shanghai Sanyou with a short position of Shanghai Yaoji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Sanyou and Shanghai Yaoji.

Diversification Opportunities for Shanghai Sanyou and Shanghai Yaoji

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Shanghai and Shanghai is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Sanyou Medical and Shanghai Yaoji Playing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Yaoji Playing and Shanghai Sanyou 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 Shanghai Sanyou Medical are associated (or correlated) with Shanghai Yaoji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Yaoji Playing has no effect on the direction of Shanghai Sanyou i.e., Shanghai Sanyou and Shanghai Yaoji go up and down completely randomly.

Pair Corralation between Shanghai Sanyou and Shanghai Yaoji

Assuming the 90 days trading horizon Shanghai Sanyou Medical is expected to generate 1.07 times more return on investment than Shanghai Yaoji. However, Shanghai Sanyou is 1.07 times more volatile than Shanghai Yaoji Playing. It trades about -0.17 of its potential returns per unit of risk. Shanghai Yaoji Playing is currently generating about -0.37 per unit of risk. If you would invest  2,200  in Shanghai Sanyou Medical on October 7, 2024 and sell it today you would lose (269.00) from holding Shanghai Sanyou Medical or give up 12.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Shanghai Sanyou Medical  vs.  Shanghai Yaoji Playing

 Performance 
       Timeline  
Shanghai Sanyou Medical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shanghai Sanyou Medical 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.
Shanghai Yaoji Playing 

Risk-Adjusted Performance

0 of 100

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

Shanghai Sanyou and Shanghai Yaoji Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shanghai Sanyou and Shanghai Yaoji

The main advantage of trading using opposite Shanghai Sanyou and Shanghai Yaoji positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Sanyou position performs unexpectedly, Shanghai Yaoji 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 Shanghai Yaoji will offset losses from the drop in Shanghai Yaoji's long position.
The idea behind Shanghai Sanyou Medical and Shanghai Yaoji Playing 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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