Correlation Between Shanghai Jin and Vatti Corp

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

By analyzing existing cross correlation between Shanghai Jin Jiang and Vatti Corp, you can compare the effects of market volatilities on Shanghai Jin and Vatti 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 Jin with a short position of Vatti Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Jin and Vatti Corp.

Diversification Opportunities for Shanghai Jin and Vatti Corp

0.62

Correlation Coefficient

Shanghai Jin  Vatti Corp

Poor diversification

The 3 months correlation between Shanghai and Vatti is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Jin Jiang and Vatti Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vatti Corp and Shanghai Jin 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 Jin Jiang are associated (or correlated) with Vatti Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vatti Corp has no effect on the direction of Shanghai Jin i.e., Shanghai Jin and Vatti Corp go up and down completely randomly.

Pair Corralation between Shanghai Jin and Vatti Corp

Assuming the 90 days trading horizon Shanghai Jin is expected to generate 1.31 times less return on investment than Vatti Corp. But when comparing it to its historical volatility, Shanghai Jin Jiang is 1.56 times less risky than Vatti Corp. It trades about 0.03 of its potential returns per unit of risk. Vatti Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  692.00  in Vatti Corp on October 13, 2024 and sell it today you would earn a total of  36.00  from holding Vatti Corp or generate 5.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.3%
Values	Daily Returns

Shanghai Jin Jiang  vs.  Vatti Corp

Shanghai Jin Jiang

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vatti Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shanghai Jin and Vatti Corp

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

The idea behind Shanghai Jin Jiang and Vatti 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.

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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.