Correlation Between Shanghai Commercial and Chyang Sheng

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

By analyzing existing cross correlation between Shanghai Commercial Savings and Chyang Sheng Dyeing, you can compare the effects of market volatilities on Shanghai Commercial and Chyang Sheng 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 Shanghai Commercial with a short position of Chyang Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Commercial and Chyang Sheng.

Diversification Opportunities for Shanghai Commercial and Chyang Sheng

0.0

Correlation Coefficient

Shanghai Commercial  Chyang Sheng

Pay attention - limited upside

The 3 months correlation between Shanghai and Chyang is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Commercial Savings and Chyang Sheng Dyeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chyang Sheng Dyeing and Shanghai Commercial 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 Shanghai Commercial Savings are associated (or correlated) with Chyang Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chyang Sheng Dyeing has no effect on the direction of Shanghai Commercial i.e., Shanghai Commercial and Chyang Sheng go up and down completely randomly.

Pair Corralation between Shanghai Commercial and Chyang Sheng

Assuming the 90 days trading horizon Shanghai Commercial Savings is expected to generate 0.82 times more return on investment than Chyang Sheng. However, Shanghai Commercial Savings is 1.22 times less risky than Chyang Sheng. It trades about 0.08 of its potential returns per unit of risk. Chyang Sheng Dyeing is currently generating about 0.02 per unit of risk. If you would invest  3,820  in Shanghai Commercial Savings on September 13, 2024 and sell it today you would earn a total of  215.00  from holding Shanghai Commercial Savings or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Shanghai Commercial Savings  vs.  Chyang Sheng Dyeing

Shanghai Commercial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Commercial Savings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shanghai Commercial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chyang Sheng Dyeing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chyang Sheng Dyeing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chyang Sheng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Shanghai Commercial and Chyang Sheng

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

The idea behind Shanghai Commercial Savings and Chyang Sheng Dyeing 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.