Correlation Between Shenzhou International and Toray Industries

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

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

Diversification Opportunities for Shenzhou International and Toray Industries

0.0

Correlation Coefficient

Shenzhou International  Toray Industries

Pay attention - limited upside

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

Pair Corralation between Shenzhou International and Toray Industries

If you would invest  501.00  in Toray Industries on September 13, 2024 and sell it today you would earn a total of  106.00  from holding Toray Industries or generate 21.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.59%
Values	Daily Returns

Shenzhou International Group  vs.  Toray Industries

Shenzhou International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Toray Industries

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Toray Industries are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Toray Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhou International and Toray Industries

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

The idea behind Shenzhou International Group and Toray Industries 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.