Correlation Between Shenzhen Clou and Zhejiang Kingland

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

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

Diversification Opportunities for Shenzhen Clou and Zhejiang Kingland

0.51

Correlation Coefficient

Shenzhen Clou  Zhejiang Kingland

Very weak diversification

The 3 months correlation between Shenzhen and Zhejiang is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Clou Electronics and Zhejiang Kingland Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Kingland and Shenzhen Clou 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 Clou Electronics are associated (or correlated) with Zhejiang Kingland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Kingland has no effect on the direction of Shenzhen Clou i.e., Shenzhen Clou and Zhejiang Kingland go up and down completely randomly.

Pair Corralation between Shenzhen Clou and Zhejiang Kingland

Assuming the 90 days trading horizon Shenzhen Clou Electronics is expected to generate 1.45 times more return on investment than Zhejiang Kingland. However, Shenzhen Clou is 1.45 times more volatile than Zhejiang Kingland Pipeline. It trades about 0.13 of its potential returns per unit of risk. Zhejiang Kingland Pipeline is currently generating about 0.07 per unit of risk. If you would invest  374.00  in Shenzhen Clou Electronics on September 26, 2024 and sell it today you would earn a total of  103.00  from holding Shenzhen Clou Electronics or generate 27.54% return on investment over 90 days.

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

Shenzhen Clou Electronics  vs.  Zhejiang Kingland Pipeline

Shenzhen Clou Electronics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Clou Electronics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Clou sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhejiang Kingland

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Kingland Pipeline are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Kingland may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shenzhen Clou and Zhejiang Kingland

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

The idea behind Shenzhen Clou Electronics and Zhejiang Kingland Pipeline 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.