Correlation Between Shenzhen Hifuture and Chison Medical

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

By analyzing existing cross correlation between Shenzhen Hifuture Electric and Chison Medical Technologies, you can compare the effects of market volatilities on Shenzhen Hifuture and Chison Medical 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 Hifuture with a short position of Chison Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Hifuture and Chison Medical.

Diversification Opportunities for Shenzhen Hifuture and Chison Medical

0.05

Correlation Coefficient

Shenzhen Hifuture  Chison Medical

Significant diversification

The 3 months correlation between Shenzhen and Chison is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Hifuture Electric and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn and Shenzhen Hifuture 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 Hifuture Electric are associated (or correlated) with Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Shenzhen Hifuture i.e., Shenzhen Hifuture and Chison Medical go up and down completely randomly.

Pair Corralation between Shenzhen Hifuture and Chison Medical

Assuming the 90 days trading horizon Shenzhen Hifuture Electric is expected to generate 0.99 times more return on investment than Chison Medical. However, Shenzhen Hifuture Electric is 1.01 times less risky than Chison Medical. It trades about -0.01 of its potential returns per unit of risk. Chison Medical Technologies is currently generating about -0.01 per unit of risk. If you would invest  401.00  in Shenzhen Hifuture Electric on September 1, 2024 and sell it today you would lose (119.00) from holding Shenzhen Hifuture Electric or give up 29.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Shenzhen Hifuture Electric  vs.  Chison Medical Technologies

Shenzhen Hifuture

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Hifuture Electric are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Hifuture may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Chison Medical Techn

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Shenzhen Hifuture and Chison Medical

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

The idea behind Shenzhen Hifuture Electric and Chison Medical Technologies 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.