Correlation Between Shenzhen Investment and PACIFIC

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

Diversification Opportunities for Shenzhen Investment and PACIFIC

-0.28

Correlation Coefficient

Shenzhen Investment  PACIFIC

Very good diversification

The 3 months correlation between Shenzhen and PACIFIC is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Investment Holdings and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of Shenzhen Investment i.e., Shenzhen Investment and PACIFIC go up and down completely randomly.

Pair Corralation between Shenzhen Investment and PACIFIC

Assuming the 90 days horizon Shenzhen Investment Holdings is expected to generate 0.36 times more return on investment than PACIFIC. However, Shenzhen Investment Holdings is 2.78 times less risky than PACIFIC. It trades about 0.16 of its potential returns per unit of risk. PACIFIC GAS AND is currently generating about -0.17 per unit of risk. If you would invest  21.00  in Shenzhen Investment Holdings on October 10, 2024 and sell it today you would earn a total of  1.00  from holding Shenzhen Investment Holdings or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.5%
Values	Daily Returns

Shenzhen Investment Holdings  vs.  PACIFIC GAS AND

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.

PACIFIC GAS AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for PACIFIC GAS AND investors.

Pair Trading with Shenzhen Investment and PACIFIC

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

The idea behind Shenzhen Investment Holdings and PACIFIC GAS AND 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.