Correlation Between Hangzhou Pinming and Senci Electric

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

Diversification Opportunities for Hangzhou Pinming and Senci Electric

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Hangzhou and Senci is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Pinming Software and Senci Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senci Electric Machinery and Hangzhou Pinming 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 Hangzhou Pinming Software are associated (or correlated) with Senci Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senci Electric Machinery has no effect on the direction of Hangzhou Pinming i.e., Hangzhou Pinming and Senci Electric go up and down completely randomly.

Pair Corralation between Hangzhou Pinming and Senci Electric

Assuming the 90 days trading horizon Hangzhou Pinming Software is expected to under-perform the Senci Electric. But the stock apears to be less risky and, when comparing its historical volatility, Hangzhou Pinming Software is 1.25 times less risky than Senci Electric. The stock trades about -0.1 of its potential returns per unit of risk. The Senci Electric Machinery is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,507  in Senci Electric Machinery on September 29, 2024 and sell it today you would earn a total of  292.00  from holding Senci Electric Machinery or generate 19.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hangzhou Pinming Software  vs.  Senci Electric Machinery

 Performance 
       Timeline  
Hangzhou Pinming Software 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hangzhou Pinming Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Senci Electric Machinery 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Senci Electric Machinery are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Senci Electric sustained solid returns over the last few months and may actually be approaching a breakup point.

Hangzhou Pinming and Senci Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hangzhou Pinming and Senci Electric

The main advantage of trading using opposite Hangzhou Pinming and Senci Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hangzhou Pinming position performs unexpectedly, Senci Electric 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 Senci Electric will offset losses from the drop in Senci Electric's long position.
The idea behind Hangzhou Pinming Software and Senci Electric Machinery 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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