Correlation Between Shanghai Sanyou and Zhuzhou CRRC

Can any of the company-specific risk be diversified away by investing in both Shanghai Sanyou and Zhuzhou CRRC 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 Zhuzhou CRRC 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 Zhuzhou CRRC Times, you can compare the effects of market volatilities on Shanghai Sanyou and Zhuzhou CRRC 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 Zhuzhou CRRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Sanyou and Zhuzhou CRRC.

Diversification Opportunities for Shanghai Sanyou and Zhuzhou CRRC

0.47

Correlation Coefficient

Shanghai Sanyou  Zhuzhou CRRC

Very weak diversification

The 3 months correlation between Shanghai and Zhuzhou is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Sanyou Medical and Zhuzhou CRRC Times in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuzhou CRRC Times 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 Zhuzhou CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuzhou CRRC Times has no effect on the direction of Shanghai Sanyou i.e., Shanghai Sanyou and Zhuzhou CRRC go up and down completely randomly.

Pair Corralation between Shanghai Sanyou and Zhuzhou CRRC

Assuming the 90 days trading horizon Shanghai Sanyou Medical is expected to generate 1.42 times more return on investment than Zhuzhou CRRC. However, Shanghai Sanyou is 1.42 times more volatile than Zhuzhou CRRC Times. It trades about 0.02 of its potential returns per unit of risk. Zhuzhou CRRC Times is currently generating about -0.09 per unit of risk. If you would invest  1,987  in Shanghai Sanyou Medical on October 24, 2024 and sell it today you would earn a total of  35.00  from holding Shanghai Sanyou Medical or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Shanghai Sanyou Medical  vs.  Zhuzhou CRRC Times

Shanghai Sanyou Medical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Sanyou Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shanghai Sanyou is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhuzhou CRRC Times

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhuzhou CRRC Times 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 Shanghai Sanyou and Zhuzhou CRRC

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

The idea behind Shanghai Sanyou Medical and Zhuzhou CRRC Times 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.