Correlation Between 159681 and Shenzhen Zhongzhuang

Can any of the company-specific risk be diversified away by investing in both 159681 and Shenzhen Zhongzhuang 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 159681 and Shenzhen Zhongzhuang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 159681 and Shenzhen Zhongzhuang Construction, you can compare the effects of market volatilities on 159681 and Shenzhen Zhongzhuang 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 159681 with a short position of Shenzhen Zhongzhuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of 159681 and Shenzhen Zhongzhuang.

Diversification Opportunities for 159681 and Shenzhen Zhongzhuang

0.51

Correlation Coefficient

159681  Shenzhen Zhongzhuang

Very weak diversification

The 3 months correlation between 159681 and Shenzhen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding 159681 and Shenzhen Zhongzhuang Construct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Zhongzhuang and 159681 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 159681 are associated (or correlated) with Shenzhen Zhongzhuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Zhongzhuang has no effect on the direction of 159681 i.e., 159681 and Shenzhen Zhongzhuang go up and down completely randomly.

Pair Corralation between 159681 and Shenzhen Zhongzhuang

Assuming the 90 days trading horizon 159681 is expected to generate 1.79 times less return on investment than Shenzhen Zhongzhuang. In addition to that, 159681 is 1.63 times more volatile than Shenzhen Zhongzhuang Construction. It trades about 0.15 of its total potential returns per unit of risk. Shenzhen Zhongzhuang Construction is currently generating about 0.45 per unit of volatility. If you would invest  193.00  in Shenzhen Zhongzhuang Construction on September 15, 2024 and sell it today you would earn a total of  242.00  from holding Shenzhen Zhongzhuang Construction or generate 125.39% return on investment over 90 days.

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

159681  vs.  Shenzhen Zhongzhuang Construct

159681

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 159681 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 159681 sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Zhongzhuang

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Zhongzhuang Construction are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Zhongzhuang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 159681 and Shenzhen Zhongzhuang

The main advantage of trading using opposite 159681 and Shenzhen Zhongzhuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 159681 position performs unexpectedly, Shenzhen Zhongzhuang 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 Shenzhen Zhongzhuang will offset losses from the drop in Shenzhen Zhongzhuang's long position.

The idea behind 159681 and Shenzhen Zhongzhuang Construction 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.