Correlation Between Everdisplay Optronics and Suzhou Weizhixiang

Can any of the company-specific risk be diversified away by investing in both Everdisplay Optronics and Suzhou Weizhixiang 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 Everdisplay Optronics and Suzhou Weizhixiang into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Everdisplay Optronics and Suzhou Weizhixiang

0.29

Correlation Coefficient

Everdisplay Optronics  Suzhou Weizhixiang

Modest diversification

The 3 months correlation between Everdisplay and Suzhou is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Everdisplay Optronics Shanghai and Suzhou Weizhixiang Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Weizhixiang Food and Everdisplay Optronics 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 Everdisplay Optronics Shanghai are associated (or correlated) with Suzhou Weizhixiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Weizhixiang Food has no effect on the direction of Everdisplay Optronics i.e., Everdisplay Optronics and Suzhou Weizhixiang go up and down completely randomly.

Pair Corralation between Everdisplay Optronics and Suzhou Weizhixiang

Assuming the 90 days trading horizon Everdisplay Optronics Shanghai is expected to generate 0.57 times more return on investment than Suzhou Weizhixiang. However, Everdisplay Optronics Shanghai is 1.75 times less risky than Suzhou Weizhixiang. It trades about -0.26 of its potential returns per unit of risk. Suzhou Weizhixiang Food is currently generating about -0.26 per unit of risk. If you would invest  243.00  in Everdisplay Optronics Shanghai on October 25, 2024 and sell it today you would lose (20.00) from holding Everdisplay Optronics Shanghai or give up 8.23% of portfolio value over 90 days.

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

Everdisplay Optronics Shanghai  vs.  Suzhou Weizhixiang Food

Everdisplay Optronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everdisplay Optronics Shanghai 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.

Suzhou Weizhixiang Food

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Everdisplay Optronics and Suzhou Weizhixiang

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

The idea behind Everdisplay Optronics Shanghai and Suzhou Weizhixiang Food 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.