Correlation Between Shanghai V-Test and Tjk Machinery

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

By analyzing existing cross correlation between Shanghai V Test Semiconductor and Tjk Machinery Tianjin, you can compare the effects of market volatilities on Shanghai V-Test and Tjk Machinery 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 V-Test with a short position of Tjk Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai V-Test and Tjk Machinery.

Diversification Opportunities for Shanghai V-Test and Tjk Machinery

0.76

Correlation Coefficient

Shanghai V-Test  Tjk Machinery

Poor diversification

The 3 months correlation between Shanghai and Tjk is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai V Test Semiconductor and Tjk Machinery Tianjin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tjk Machinery Tianjin and Shanghai V-Test 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 V Test Semiconductor are associated (or correlated) with Tjk Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tjk Machinery Tianjin has no effect on the direction of Shanghai V-Test i.e., Shanghai V-Test and Tjk Machinery go up and down completely randomly.

Pair Corralation between Shanghai V-Test and Tjk Machinery

Assuming the 90 days trading horizon Shanghai V Test Semiconductor is expected to generate 1.25 times more return on investment than Tjk Machinery. However, Shanghai V-Test is 1.25 times more volatile than Tjk Machinery Tianjin. It trades about 0.14 of its potential returns per unit of risk. Tjk Machinery Tianjin is currently generating about 0.04 per unit of risk. If you would invest  5,906  in Shanghai V Test Semiconductor on December 25, 2024 and sell it today you would earn a total of  1,736  from holding Shanghai V Test Semiconductor or generate 29.39% return on investment over 90 days.

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

Shanghai V Test Semiconductor  vs.  Tjk Machinery Tianjin

Shanghai V Test

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai V Test Semiconductor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai V-Test sustained solid returns over the last few months and may actually be approaching a breakup point.

Tjk Machinery Tianjin

Risk-Adjusted Performance

Weak

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

Pair Trading with Shanghai V-Test and Tjk Machinery

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

The idea behind Shanghai V Test Semiconductor and Tjk Machinery Tianjin 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.