Correlation Between Shenzhen Expressway and Shenzhen International

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

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

Diversification Opportunities for Shenzhen Expressway and Shenzhen International

0.0

Correlation Coefficient

Shenzhen Expressway  Shenzhen International

Pay attention - limited upside

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

Pair Corralation between Shenzhen Expressway and Shenzhen International

If you would invest (100.00) in Shenzhen International Holdings on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Shenzhen International Holdings or generate -100.0% return on investment over 90 days.

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

Shenzhen Expressway  vs.  Shenzhen International Holding

Shenzhen Expressway

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Expressway has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Shenzhen International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Shenzhen International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Shenzhen Expressway and Shenzhen International

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

The idea behind Shenzhen Expressway and Shenzhen International Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.