Correlation Between Shenzhen Investment and CAPITAL

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

Diversification Opportunities for Shenzhen Investment and CAPITAL

0.0

Correlation Coefficient

Shenzhen Investment  CAPITAL

Pay attention - limited upside

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

Pair Corralation between Shenzhen Investment and CAPITAL

If you would invest  9,705  in CAPITAL ONE FINANCIAL on December 24, 2024 and sell it today you would earn a total of  130.00  from holding CAPITAL ONE FINANCIAL or generate 1.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Shenzhen Investment Holdings  vs.  CAPITAL ONE FINANCIAL

Shenzhen Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Investment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

CAPITAL ONE FINANCIAL

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CAPITAL ONE FINANCIAL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CAPITAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shenzhen Investment and CAPITAL

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

The idea behind Shenzhen Investment Holdings and CAPITAL ONE FINANCIAL 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.