Correlation Between Liaoning Chengda and Shanghai Fudan

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

By analyzing existing cross correlation between Liaoning Chengda Biotechnology and Shanghai Fudan Microelectronics, you can compare the effects of market volatilities on Liaoning Chengda and Shanghai Fudan 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 Liaoning Chengda with a short position of Shanghai Fudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liaoning Chengda and Shanghai Fudan.

Diversification Opportunities for Liaoning Chengda and Shanghai Fudan

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Correlation Coefficient

Liaoning Chengda  Shanghai Fudan

Pay attention - limited upside

The 3 months correlation between Liaoning and Shanghai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Liaoning Chengda Biotechnology and Shanghai Fudan Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Fudan Micro and Liaoning Chengda 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 Liaoning Chengda Biotechnology are associated (or correlated) with Shanghai Fudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Fudan Micro has no effect on the direction of Liaoning Chengda i.e., Liaoning Chengda and Shanghai Fudan go up and down completely randomly.

Pair Corralation between Liaoning Chengda and Shanghai Fudan

If you would invest (100.00) in Shanghai Fudan Microelectronics on October 23, 2024 and sell it today you would earn a total of  100.00  from holding Shanghai Fudan Microelectronics or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Liaoning Chengda Biotechnology  vs.  Shanghai Fudan Microelectronic

Liaoning Chengda Bio

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Liaoning Chengda Biotechnology 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.

Shanghai Fudan Micro

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Liaoning Chengda and Shanghai Fudan

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

The idea behind Liaoning Chengda Biotechnology and Shanghai Fudan Microelectronics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.