Correlation Between Shenzhen Investment and Suzano SA

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

By analyzing existing cross correlation between Shenzhen Investment Limited and Suzano SA, you can compare the effects of market volatilities on Shenzhen Investment and Suzano SA 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 Suzano SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Investment and Suzano SA.

Diversification Opportunities for Shenzhen Investment and Suzano SA

-0.4

Correlation Coefficient

Shenzhen Investment  Suzano SA

Very good diversification

The 3 months correlation between Shenzhen and Suzano is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Investment Limited and Suzano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano SA 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 Limited are associated (or correlated) with Suzano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano SA has no effect on the direction of Shenzhen Investment i.e., Shenzhen Investment and Suzano SA go up and down completely randomly.

Pair Corralation between Shenzhen Investment and Suzano SA

Assuming the 90 days horizon Shenzhen Investment Limited is expected to generate 2.7 times more return on investment than Suzano SA. However, Shenzhen Investment is 2.7 times more volatile than Suzano SA. It trades about 0.02 of its potential returns per unit of risk. Suzano SA is currently generating about 0.03 per unit of risk. If you would invest  14.00  in Shenzhen Investment Limited on October 11, 2024 and sell it today you would lose (3.00) from holding Shenzhen Investment Limited or give up 21.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Shenzhen Investment Limited  vs.  Suzano SA

Shenzhen Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Investment Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Shenzhen Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Suzano SA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suzano SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Suzano SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Investment and Suzano SA

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

The idea behind Shenzhen Investment Limited and Suzano SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.