Correlation Between Shenzhen International and Jiangsu Expressway

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

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

Diversification Opportunities for Shenzhen International and Jiangsu Expressway

0.0

Correlation Coefficient

Shenzhen International  Jiangsu Expressway

Pay attention - limited upside

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

Pair Corralation between Shenzhen International and Jiangsu Expressway

If you would invest  107.00  in Jiangsu Expressway on October 8, 2024 and sell it today you would earn a total of  6.00  from holding Jiangsu Expressway or generate 5.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Shenzhen International Holding  vs.  Jiangsu Expressway

Shenzhen International

Risk-Adjusted Performance

0 of 100

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.

Jiangsu Expressway

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Expressway are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Jiangsu Expressway may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shenzhen International and Jiangsu Expressway

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

The idea behind Shenzhen International Holdings and Jiangsu Expressway 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.