Correlation Between Shenzhen SDG and Jonjee Hi

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

By analyzing existing cross correlation between Shenzhen SDG Information and Jonjee Hi tech Industrial, you can compare the effects of market volatilities on Shenzhen SDG and Jonjee Hi 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 SDG with a short position of Jonjee Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen SDG and Jonjee Hi.

Diversification Opportunities for Shenzhen SDG and Jonjee Hi

0.84

Correlation Coefficient

Shenzhen SDG  Jonjee Hi

Very poor diversification

The 3 months correlation between Shenzhen and Jonjee is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen SDG Information and Jonjee Hi tech Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jonjee Hi tech and Shenzhen SDG 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 SDG Information are associated (or correlated) with Jonjee Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jonjee Hi tech has no effect on the direction of Shenzhen SDG i.e., Shenzhen SDG and Jonjee Hi go up and down completely randomly.

Pair Corralation between Shenzhen SDG and Jonjee Hi

Assuming the 90 days trading horizon Shenzhen SDG is expected to generate 1.01 times less return on investment than Jonjee Hi. But when comparing it to its historical volatility, Shenzhen SDG Information is 1.26 times less risky than Jonjee Hi. It trades about 0.28 of its potential returns per unit of risk. Jonjee Hi tech Industrial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,633  in Jonjee Hi tech Industrial on September 15, 2024 and sell it today you would earn a total of  810.00  from holding Jonjee Hi tech Industrial or generate 49.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Shenzhen SDG Information  vs.  Jonjee Hi tech Industrial

Shenzhen SDG Information

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen SDG Information are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen SDG sustained solid returns over the last few months and may actually be approaching a breakup point.

Jonjee Hi tech

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jonjee Hi tech Industrial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jonjee Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen SDG and Jonjee Hi

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

The idea behind Shenzhen SDG Information and Jonjee Hi tech Industrial 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.