Correlation Between Shanghai CEO and Yankershop Food

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

By analyzing existing cross correlation between Shanghai CEO Environmental and Yankershop Food Co, you can compare the effects of market volatilities on Shanghai CEO and Yankershop Food 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 CEO with a short position of Yankershop Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai CEO and Yankershop Food.

Diversification Opportunities for Shanghai CEO and Yankershop Food

0.11

Correlation Coefficient

Shanghai CEO  Yankershop Food

Average diversification

The 3 months correlation between Shanghai and Yankershop is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai CEO Environmental and Yankershop Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yankershop Food and Shanghai CEO 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 CEO Environmental are associated (or correlated) with Yankershop Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yankershop Food has no effect on the direction of Shanghai CEO i.e., Shanghai CEO and Yankershop Food go up and down completely randomly.

Pair Corralation between Shanghai CEO and Yankershop Food

Assuming the 90 days trading horizon Shanghai CEO Environmental is expected to generate 19.68 times more return on investment than Yankershop Food. However, Shanghai CEO is 19.68 times more volatile than Yankershop Food Co. It trades about 0.04 of its potential returns per unit of risk. Yankershop Food Co is currently generating about 0.04 per unit of risk. If you would invest  2,121  in Shanghai CEO Environmental on October 4, 2024 and sell it today you would lose (1,290) from holding Shanghai CEO Environmental or give up 60.82% of portfolio value over 90 days.

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

Shanghai CEO Environmental  vs.  Yankershop Food Co

Shanghai CEO Environ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai CEO Environmental 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.

Yankershop Food

Risk-Adjusted Performance

7 of 100

Modest

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

Pair Trading with Shanghai CEO and Yankershop Food

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

The idea behind Shanghai CEO Environmental and Yankershop Food 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.