Correlation Between Shanghai V and Beken Corp

Can any of the company-specific risk be diversified away by investing in both Shanghai V and Beken Corp 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 and Beken Corp 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 Beken Corp, you can compare the effects of market volatilities on Shanghai V and Beken Corp 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 with a short position of Beken Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai V and Beken Corp.

Diversification Opportunities for Shanghai V and Beken Corp

0.34

Correlation Coefficient

Shanghai V  Beken Corp

Weak diversification

The 3 months correlation between Shanghai and Beken is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai V Test Semiconductor and Beken Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beken Corp and Shanghai V 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 Beken Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beken Corp has no effect on the direction of Shanghai V i.e., Shanghai V and Beken Corp go up and down completely randomly.

Pair Corralation between Shanghai V and Beken Corp

Assuming the 90 days trading horizon Shanghai V Test Semiconductor is expected to generate 0.56 times more return on investment than Beken Corp. However, Shanghai V Test Semiconductor is 1.78 times less risky than Beken Corp. It trades about 0.02 of its potential returns per unit of risk. Beken Corp is currently generating about -0.05 per unit of risk. If you would invest  6,048  in Shanghai V Test Semiconductor on October 10, 2024 and sell it today you would earn a total of  7.00  from holding Shanghai V Test Semiconductor or generate 0.12% return on investment over 90 days.

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

Shanghai V Test Semiconductor  vs.  Beken Corp

Shanghai V Test

Risk-Adjusted Performance

3 of 100

Insignificant

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

Beken Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beken Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beken Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shanghai V and Beken Corp

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

The idea behind Shanghai V Test Semiconductor and Beken Corp 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.