Correlation Between Goodwill E and Shanghai Ziyan

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

By analyzing existing cross correlation between Goodwill E Health and Shanghai Ziyan Foods, you can compare the effects of market volatilities on Goodwill E and Shanghai Ziyan 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 Goodwill E with a short position of Shanghai Ziyan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodwill E and Shanghai Ziyan.

Diversification Opportunities for Goodwill E and Shanghai Ziyan

0.14

Correlation Coefficient

Goodwill E  Shanghai Ziyan

Average diversification

The 3 months correlation between Goodwill and Shanghai is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Goodwill E Health and Shanghai Ziyan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Ziyan Foods and Goodwill E 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 Goodwill E Health are associated (or correlated) with Shanghai Ziyan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Ziyan Foods has no effect on the direction of Goodwill E i.e., Goodwill E and Shanghai Ziyan go up and down completely randomly.

Pair Corralation between Goodwill E and Shanghai Ziyan

Assuming the 90 days trading horizon Goodwill E Health is expected to generate 2.08 times more return on investment than Shanghai Ziyan. However, Goodwill E is 2.08 times more volatile than Shanghai Ziyan Foods. It trades about 0.09 of its potential returns per unit of risk. Shanghai Ziyan Foods is currently generating about 0.03 per unit of risk. If you would invest  2,612  in Goodwill E Health on December 27, 2024 and sell it today you would earn a total of  647.00  from holding Goodwill E Health or generate 24.77% return on investment over 90 days.

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

Goodwill E Health  vs.  Shanghai Ziyan Foods

Goodwill E Health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goodwill E Health are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Goodwill E sustained solid returns over the last few months and may actually be approaching a breakup point.

Shanghai Ziyan Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Ziyan Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shanghai Ziyan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goodwill E and Shanghai Ziyan

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

The idea behind Goodwill E Health and Shanghai Ziyan Foods 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.