Correlation Between Shenzhen Kexin and Winner Medical Co

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

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

Diversification Opportunities for Shenzhen Kexin and Winner Medical Co

0.83

Correlation Coefficient

Shenzhen Kexin  Winner Medical Co

Very poor diversification

The 3 months correlation between Shenzhen and Winner is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Kexin Communication and Winner Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winner Medical Co and Shenzhen Kexin 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 Kexin Communication are associated (or correlated) with Winner Medical Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winner Medical Co has no effect on the direction of Shenzhen Kexin i.e., Shenzhen Kexin and Winner Medical Co go up and down completely randomly.

Pair Corralation between Shenzhen Kexin and Winner Medical Co

Assuming the 90 days trading horizon Shenzhen Kexin is expected to generate 1.23 times less return on investment than Winner Medical Co. In addition to that, Shenzhen Kexin is 1.03 times more volatile than Winner Medical Co. It trades about 0.13 of its total potential returns per unit of risk. Winner Medical Co is currently generating about 0.16 per unit of volatility. If you would invest  2,507  in Winner Medical Co on August 31, 2024 and sell it today you would earn a total of  1,013  from holding Winner Medical Co or generate 40.41% return on investment over 90 days.

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

Shenzhen Kexin Communication  vs.  Winner Medical Co

Shenzhen Kexin Commu

Risk-Adjusted Performance

9 of 100

OK

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

Winner Medical Co

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Shenzhen Kexin and Winner Medical Co

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

The idea behind Shenzhen Kexin Communication and Winner Medical 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .