Correlation Between Shaanxi Energy and Ciwen Media

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

By analyzing existing cross correlation between Shaanxi Energy Investment and Ciwen Media Co, you can compare the effects of market volatilities on Shaanxi Energy and Ciwen Media 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 Shaanxi Energy with a short position of Ciwen Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Energy and Ciwen Media.

Diversification Opportunities for Shaanxi Energy and Ciwen Media

0.42

Correlation Coefficient

Shaanxi Energy  Ciwen Media

Very weak diversification

The 3 months correlation between Shaanxi and Ciwen is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Energy Investment and Ciwen Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciwen Media and Shaanxi Energy 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 Shaanxi Energy Investment are associated (or correlated) with Ciwen Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciwen Media has no effect on the direction of Shaanxi Energy i.e., Shaanxi Energy and Ciwen Media go up and down completely randomly.

Pair Corralation between Shaanxi Energy and Ciwen Media

Assuming the 90 days trading horizon Shaanxi Energy is expected to generate 4.51 times less return on investment than Ciwen Media. But when comparing it to its historical volatility, Shaanxi Energy Investment is 1.86 times less risky than Ciwen Media. It trades about 0.1 of its potential returns per unit of risk. Ciwen Media Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  499.00  in Ciwen Media Co on September 14, 2024 and sell it today you would earn a total of  296.00  from holding Ciwen Media Co or generate 59.32% return on investment over 90 days.

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

Shaanxi Energy Investment  vs.  Ciwen Media Co

Shaanxi Energy Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shaanxi Energy Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaanxi Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ciwen Media

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ciwen Media Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ciwen Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shaanxi Energy and Ciwen Media

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

The idea behind Shaanxi Energy Investment and Ciwen Media Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.