Correlation Between Shenzhen Investment and Gauzy

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

By analyzing existing cross correlation between Shenzhen Investment Holdings and Gauzy Ltd Ordinary, you can compare the effects of market volatilities on Shenzhen Investment and Gauzy 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 Shenzhen Investment with a short position of Gauzy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Investment and Gauzy.

Diversification Opportunities for Shenzhen Investment and Gauzy

0.27

Correlation Coefficient

Shenzhen Investment  Gauzy

Modest diversification

The 3 months correlation between Shenzhen and Gauzy is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Investment Holdings and Gauzy Ltd Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gauzy Ordinary and Shenzhen Investment 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 Shenzhen Investment Holdings are associated (or correlated) with Gauzy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gauzy Ordinary has no effect on the direction of Shenzhen Investment i.e., Shenzhen Investment and Gauzy go up and down completely randomly.

Pair Corralation between Shenzhen Investment and Gauzy

Assuming the 90 days horizon Shenzhen Investment is expected to generate 6.28 times less return on investment than Gauzy. But when comparing it to its historical volatility, Shenzhen Investment Holdings is 7.76 times less risky than Gauzy. It trades about 0.13 of its potential returns per unit of risk. Gauzy Ltd Ordinary is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,010  in Gauzy Ltd Ordinary on October 26, 2024 and sell it today you would earn a total of  263.00  from holding Gauzy Ltd Ordinary or generate 26.04% return on investment over 90 days.

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

Shenzhen Investment Holdings  vs.  Gauzy Ltd Ordinary

Shenzhen Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Investment Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Shenzhen Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Gauzy Ordinary

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Shenzhen Investment and Gauzy

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

The idea behind Shenzhen Investment Holdings and Gauzy Ltd Ordinary 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.