Correlation Between Suzhou Novoprotein and Shenzhen

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

By analyzing existing cross correlation between Suzhou Novoprotein Scientific and Shenzhen AV Display Co, you can compare the effects of market volatilities on Suzhou Novoprotein and Shenzhen 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 Suzhou Novoprotein with a short position of Shenzhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzhou Novoprotein and Shenzhen.

Diversification Opportunities for Suzhou Novoprotein and Shenzhen

0.49

Correlation Coefficient

Suzhou Novoprotein  Shenzhen

Very weak diversification

The 3 months correlation between Suzhou and Shenzhen is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Suzhou Novoprotein Scientific and Shenzhen AV Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen AV Display and Suzhou Novoprotein 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 Suzhou Novoprotein Scientific are associated (or correlated) with Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen AV Display has no effect on the direction of Suzhou Novoprotein i.e., Suzhou Novoprotein and Shenzhen go up and down completely randomly.

Pair Corralation between Suzhou Novoprotein and Shenzhen

Assuming the 90 days trading horizon Suzhou Novoprotein Scientific is expected to generate 0.57 times more return on investment than Shenzhen. However, Suzhou Novoprotein Scientific is 1.74 times less risky than Shenzhen. It trades about -0.1 of its potential returns per unit of risk. Shenzhen AV Display Co is currently generating about -0.07 per unit of risk. If you would invest  3,677  in Suzhou Novoprotein Scientific on December 1, 2024 and sell it today you would lose (318.00) from holding Suzhou Novoprotein Scientific or give up 8.65% of portfolio value over 90 days.

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

Suzhou Novoprotein Scientific  vs.  Shenzhen AV Display Co

Suzhou Novoprotein

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suzhou Novoprotein Scientific 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.

Shenzhen AV Display

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen AV Display Co 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 Suzhou Novoprotein and Shenzhen

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

The idea behind Suzhou Novoprotein Scientific and Shenzhen AV Display Co 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.