Correlation Between Shengfeng Development and JB Hunt

Can any of the company-specific risk be diversified away by investing in both Shengfeng Development and JB Hunt 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 Shengfeng Development and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shengfeng Development Limited and JB Hunt Transport, you can compare the effects of market volatilities on Shengfeng Development and JB Hunt 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 Shengfeng Development with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shengfeng Development and JB Hunt.

Diversification Opportunities for Shengfeng Development and JB Hunt

0.39

Correlation Coefficient

Shengfeng Development  JB Hunt

Weak diversification

The 3 months correlation between Shengfeng and JBHT is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Shengfeng Development Limited and JB Hunt Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hunt Transport and Shengfeng Development 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 Shengfeng Development Limited are associated (or correlated) with JB Hunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hunt Transport has no effect on the direction of Shengfeng Development i.e., Shengfeng Development and JB Hunt go up and down completely randomly.

Pair Corralation between Shengfeng Development and JB Hunt

Given the investment horizon of 90 days Shengfeng Development Limited is expected to generate 1.04 times more return on investment than JB Hunt. However, Shengfeng Development is 1.04 times more volatile than JB Hunt Transport. It trades about -0.02 of its potential returns per unit of risk. JB Hunt Transport is currently generating about -0.12 per unit of risk. If you would invest  102.00  in Shengfeng Development Limited on December 29, 2024 and sell it today you would lose (4.00) from holding Shengfeng Development Limited or give up 3.92% of portfolio value over 90 days.

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

Shengfeng Development Limited  vs.  JB Hunt Transport

Shengfeng Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shengfeng Development Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Shengfeng Development is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

JB Hunt Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days JB Hunt Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Shengfeng Development and JB Hunt

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

The idea behind Shengfeng Development Limited and JB Hunt Transport 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.