Correlation Between Shanghai and 5I5j Holding

Can any of the company-specific risk be diversified away by investing in both Shanghai and 5I5j Holding 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 and 5I5j Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shanghai SK Automation and 5I5j Holding Group, you can compare the effects of market volatilities on Shanghai and 5I5j Holding 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 with a short position of 5I5j Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai and 5I5j Holding.

Diversification Opportunities for Shanghai and 5I5j Holding

0.68

Correlation Coefficient

Shanghai  5I5j Holding

Poor diversification

The 3 months correlation between Shanghai and 5I5j is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai SK Automation and 5I5j Holding Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5I5j Holding Group and Shanghai 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 SK Automation are associated (or correlated) with 5I5j Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5I5j Holding Group has no effect on the direction of Shanghai i.e., Shanghai and 5I5j Holding go up and down completely randomly.

Pair Corralation between Shanghai and 5I5j Holding

Assuming the 90 days trading horizon Shanghai SK Automation is expected to under-perform the 5I5j Holding. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai SK Automation is 1.18 times less risky than 5I5j Holding. The stock trades about -0.01 of its potential returns per unit of risk. The 5I5j Holding Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  272.00  in 5I5j Holding Group on October 4, 2024 and sell it today you would earn a total of  33.00  from holding 5I5j Holding Group or generate 12.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Shanghai SK Automation  vs.  5I5j Holding Group

Shanghai SK Automation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai SK Automation 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

5I5j Holding Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5I5j Holding Group 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shanghai and 5I5j Holding

The main advantage of trading using opposite Shanghai and 5I5j Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai position performs unexpectedly, 5I5j Holding 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 5I5j Holding will offset losses from the drop in 5I5j Holding's long position.

The idea behind Shanghai SK Automation and 5I5j Holding Group 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.