Correlation Between Allgens Medical and Shenzhen Glory

Can any of the company-specific risk be diversified away by investing in both Allgens Medical and Shenzhen Glory 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 Allgens Medical and Shenzhen Glory into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allgens Medical Technology and Shenzhen Glory Medical, you can compare the effects of market volatilities on Allgens Medical and Shenzhen Glory 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 Allgens Medical with a short position of Shenzhen Glory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allgens Medical and Shenzhen Glory.

Diversification Opportunities for Allgens Medical and Shenzhen Glory

0.59

Correlation Coefficient

Allgens Medical  Shenzhen Glory

Very weak diversification

The 3 months correlation between Allgens and Shenzhen is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Allgens Medical Technology and Shenzhen Glory Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Glory Medical and Allgens Medical 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 Allgens Medical Technology are associated (or correlated) with Shenzhen Glory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Glory Medical has no effect on the direction of Allgens Medical i.e., Allgens Medical and Shenzhen Glory go up and down completely randomly.

Pair Corralation between Allgens Medical and Shenzhen Glory

Assuming the 90 days trading horizon Allgens Medical Technology is expected to under-perform the Shenzhen Glory. But the stock apears to be less risky and, when comparing its historical volatility, Allgens Medical Technology is 1.74 times less risky than Shenzhen Glory. The stock trades about -0.24 of its potential returns per unit of risk. The Shenzhen Glory Medical is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  310.00  in Shenzhen Glory Medical on October 26, 2024 and sell it today you would lose (20.00) from holding Shenzhen Glory Medical or give up 6.45% of portfolio value over 90 days.

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

Allgens Medical Technology  vs.  Shenzhen Glory Medical

Allgens Medical Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allgens Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Allgens Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shenzhen Glory Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Glory Medical 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.

Pair Trading with Allgens Medical and Shenzhen Glory

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

The idea behind Allgens Medical Technology and Shenzhen Glory Medical 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.