Correlation Between ButOne Information and Shenzhen Zhenye

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

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

Diversification Opportunities for ButOne Information and Shenzhen Zhenye

0.89

Correlation Coefficient

ButOne Information  Shenzhen Zhenye

Very poor diversification

The 3 months correlation between ButOne and Shenzhen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ButOne Information Corp and Shenzhen Zhenye Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Zhenye Group and ButOne Information 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 ButOne Information Corp are associated (or correlated) with Shenzhen Zhenye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Zhenye Group has no effect on the direction of ButOne Information i.e., ButOne Information and Shenzhen Zhenye go up and down completely randomly.

Pair Corralation between ButOne Information and Shenzhen Zhenye

Assuming the 90 days trading horizon ButOne Information Corp is expected to generate 1.05 times more return on investment than Shenzhen Zhenye. However, ButOne Information is 1.05 times more volatile than Shenzhen Zhenye Group. It trades about -0.08 of its potential returns per unit of risk. Shenzhen Zhenye Group is currently generating about -0.11 per unit of risk. If you would invest  2,337  in ButOne Information Corp on September 29, 2024 and sell it today you would lose (180.00) from holding ButOne Information Corp or give up 7.7% of portfolio value over 90 days.

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

ButOne Information Corp  vs.  Shenzhen Zhenye Group

ButOne Information Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ButOne Information Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ButOne Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Zhenye Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Zhenye Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Zhenye sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ButOne Information and Shenzhen Zhenye

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

The idea behind ButOne Information Corp and Shenzhen Zhenye Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.