Correlation Between Shanghai Jin and China CYTS

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

By analyzing existing cross correlation between Shanghai Jin Jiang and China CYTS Tours, you can compare the effects of market volatilities on Shanghai Jin and China CYTS 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 Jin with a short position of China CYTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Jin and China CYTS.

Diversification Opportunities for Shanghai Jin and China CYTS

0.84

Correlation Coefficient

Shanghai Jin  China CYTS

Very poor diversification

The 3 months correlation between Shanghai and China is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Jin Jiang and China CYTS Tours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China CYTS Tours and Shanghai Jin 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 Jin Jiang are associated (or correlated) with China CYTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China CYTS Tours has no effect on the direction of Shanghai Jin i.e., Shanghai Jin and China CYTS go up and down completely randomly.

Pair Corralation between Shanghai Jin and China CYTS

Assuming the 90 days trading horizon Shanghai Jin Jiang is expected to under-perform the China CYTS. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Jin Jiang is 1.3 times less risky than China CYTS. The stock trades about -0.08 of its potential returns per unit of risk. The China CYTS Tours is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,109  in China CYTS Tours on September 28, 2024 and sell it today you would lose (66.00) from holding China CYTS Tours or give up 5.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Shanghai Jin Jiang  vs.  China CYTS Tours

Shanghai Jin Jiang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai Jin Jiang has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

China CYTS Tours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China CYTS Tours has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China CYTS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shanghai Jin and China CYTS

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

The idea behind Shanghai Jin Jiang and China CYTS Tours 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .