Correlation Between Shanghai Industrial and Seaboard

Can any of the company-specific risk be diversified away by investing in both Shanghai Industrial and Seaboard 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 Seaboard 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 Seaboard, you can compare the effects of market volatilities on Shanghai Industrial and Seaboard 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 Seaboard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Industrial and Seaboard.

Diversification Opportunities for Shanghai Industrial and Seaboard

0.0

Correlation Coefficient

Shanghai Industrial  Seaboard

Pay attention - limited upside

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

Pair Corralation between Shanghai Industrial and Seaboard

If you would invest  245,640  in Seaboard on December 21, 2024 and sell it today you would earn a total of  25,507  from holding Seaboard or generate 10.38% return on investment over 90 days.

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

Shanghai Industrial Holdings  vs.  Seaboard

Shanghai Industrial

Risk-Adjusted Performance

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.

Seaboard

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Seaboard are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Seaboard may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shanghai Industrial and Seaboard

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

The idea behind Shanghai Industrial Holdings and Seaboard 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.