Correlation Between Shanghai Rightongene and Shanxi Xishan

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

By analyzing existing cross correlation between Shanghai Rightongene Biotechnology and Shanxi Xishan Coal, you can compare the effects of market volatilities on Shanghai Rightongene and Shanxi Xishan 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 Rightongene with a short position of Shanxi Xishan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rightongene and Shanxi Xishan.

Diversification Opportunities for Shanghai Rightongene and Shanxi Xishan

0.0

Correlation Coefficient

Shanghai Rightongene  Shanxi Xishan

Pay attention - limited upside

The 3 months correlation between Shanghai and Shanxi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rightongene Biotechno and Shanxi Xishan Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Xishan Coal and Shanghai Rightongene 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 Rightongene Biotechnology are associated (or correlated) with Shanxi Xishan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Xishan Coal has no effect on the direction of Shanghai Rightongene i.e., Shanghai Rightongene and Shanxi Xishan go up and down completely randomly.

Pair Corralation between Shanghai Rightongene and Shanxi Xishan

If you would invest  1,957  in Shanghai Rightongene Biotechnology on October 25, 2024 and sell it today you would lose (22.00) from holding Shanghai Rightongene Biotechnology or give up 1.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Shanghai Rightongene Biotechno  vs.  Shanxi Xishan Coal

Shanghai Rightongene

Risk-Adjusted Performance

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Weak

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

Shanxi Xishan Coal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shanghai Rightongene and Shanxi Xishan

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

The idea behind Shanghai Rightongene Biotechnology and Shanxi Xishan Coal 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.