Correlation Between Zhuhai Comleader and Shenzhen Glory

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

By analyzing existing cross correlation between Zhuhai Comleader Information and Shenzhen Glory Medical, you can compare the effects of market volatilities on Zhuhai Comleader and Shenzhen Glory 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 Zhuhai Comleader with a short position of Shenzhen Glory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuhai Comleader and Shenzhen Glory.

Diversification Opportunities for Zhuhai Comleader and Shenzhen Glory

0.9

Correlation Coefficient

Zhuhai Comleader  Shenzhen Glory

Almost no diversification

The 3 months correlation between Zhuhai and Shenzhen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Zhuhai Comleader Information and Shenzhen Glory Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Glory Medical and Zhuhai Comleader 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 Zhuhai Comleader Information are associated (or correlated) with Shenzhen Glory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Glory Medical has no effect on the direction of Zhuhai Comleader i.e., Zhuhai Comleader and Shenzhen Glory go up and down completely randomly.

Pair Corralation between Zhuhai Comleader and Shenzhen Glory

Assuming the 90 days trading horizon Zhuhai Comleader Information is expected to under-perform the Shenzhen Glory. In addition to that, Zhuhai Comleader is 1.08 times more volatile than Shenzhen Glory Medical. It trades about -0.01 of its total potential returns per unit of risk. Shenzhen Glory Medical is currently generating about 0.05 per unit of volatility. If you would invest  310.00  in Shenzhen Glory Medical on December 25, 2024 and sell it today you would earn a total of  16.00  from holding Shenzhen Glory Medical or generate 5.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.28%
Values	Daily Returns

Zhuhai Comleader Information  vs.  Shenzhen Glory Medical

Zhuhai Comleader Inf

Risk-Adjusted Performance

Very Weak

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

Shenzhen Glory Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Glory Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Glory may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Zhuhai Comleader and Shenzhen Glory

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

The idea behind Zhuhai Comleader Information and Shenzhen Glory Medical 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.