Correlation Between Shanghai CEO and Anji Foodstuff

Can any of the company-specific risk be diversified away by investing in both Shanghai CEO and Anji Foodstuff 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 Anji Foodstuff 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 Anji Foodstuff Co, you can compare the effects of market volatilities on Shanghai CEO and Anji Foodstuff 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 Anji Foodstuff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai CEO and Anji Foodstuff.

Diversification Opportunities for Shanghai CEO and Anji Foodstuff

0.5

Correlation Coefficient

Shanghai CEO  Anji Foodstuff

Very weak diversification

The 3 months correlation between Shanghai and Anji is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai CEO Environmental and Anji Foodstuff Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anji Foodstuff 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 Anji Foodstuff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anji Foodstuff has no effect on the direction of Shanghai CEO i.e., Shanghai CEO and Anji Foodstuff go up and down completely randomly.

Pair Corralation between Shanghai CEO and Anji Foodstuff

Assuming the 90 days trading horizon Shanghai CEO Environmental is expected to generate 16.9 times more return on investment than Anji Foodstuff. However, Shanghai CEO is 16.9 times more volatile than Anji Foodstuff Co. It trades about 0.04 of its potential returns per unit of risk. Anji Foodstuff Co is currently generating about 0.0 per unit of risk. If you would invest  2,262  in Shanghai CEO Environmental on October 10, 2024 and sell it today you would lose (1,426) from holding Shanghai CEO Environmental or give up 63.04% of portfolio value over 90 days.

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

Shanghai CEO Environmental  vs.  Anji Foodstuff 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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Anji Foodstuff

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Shanghai CEO and Anji Foodstuff

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

The idea behind Shanghai CEO Environmental and Anji Foodstuff 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.