Correlation Between Shui Mu and Victory New

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

By analyzing existing cross correlation between Shui Mu International Co and Victory New Materials, you can compare the effects of market volatilities on Shui Mu and Victory New 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 Shui Mu with a short position of Victory New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shui Mu and Victory New.

Diversification Opportunities for Shui Mu and Victory New

0.64

Correlation Coefficient

Shui Mu  Victory New

Poor diversification

The 3 months correlation between Shui and Victory is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shui Mu International Co and Victory New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory New Materials and Shui Mu 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 Shui Mu International Co are associated (or correlated) with Victory New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory New Materials has no effect on the direction of Shui Mu i.e., Shui Mu and Victory New go up and down completely randomly.

Pair Corralation between Shui Mu and Victory New

Assuming the 90 days trading horizon Shui Mu is expected to generate 17.32 times less return on investment than Victory New. But when comparing it to its historical volatility, Shui Mu International Co is 2.41 times less risky than Victory New. It trades about 0.0 of its potential returns per unit of risk. Victory New Materials is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  978.00  in Victory New Materials on September 1, 2024 and sell it today you would earn a total of  16.00  from holding Victory New Materials or generate 1.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Shui Mu International Co  vs.  Victory New Materials

Shui Mu International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shui Mu International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shui Mu is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Victory New Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Victory New Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Victory New 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 Shui Mu and Victory New

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

The idea behind Shui Mu International Co and Victory New Materials 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.