Correlation Between Shanghai Industrial and Halma PLC

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

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

Diversification Opportunities for Shanghai Industrial and Halma PLC

0.0

Correlation Coefficient

Shanghai Industrial  Halma PLC

Pay attention - limited upside

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

Pair Corralation between Shanghai Industrial and Halma PLC

If you would invest  6,893  in Halma PLC on October 25, 2024 and sell it today you would earn a total of  371.00  from holding Halma PLC or generate 5.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.56%
Values	Daily Returns

Shanghai Industrial Holdings  vs.  Halma PLC

Shanghai Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai Industrial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Shanghai Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Halma PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Halma PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Halma PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shanghai Industrial and Halma PLC

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

The idea behind Shanghai Industrial Holdings and Halma PLC 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.