Correlation Between Cryoport and Shengfeng Development

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

By analyzing existing cross correlation between Cryoport and Shengfeng Development Limited, you can compare the effects of market volatilities on Cryoport and Shengfeng Development 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 Cryoport with a short position of Shengfeng Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cryoport and Shengfeng Development.

Diversification Opportunities for Cryoport and Shengfeng Development

0.21

Correlation Coefficient

Cryoport  Shengfeng Development

Modest diversification

The 3 months correlation between Cryoport and Shengfeng is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cryoport and Shengfeng Development Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengfeng Development and Cryoport 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 Cryoport are associated (or correlated) with Shengfeng Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengfeng Development has no effect on the direction of Cryoport i.e., Cryoport and Shengfeng Development go up and down completely randomly.

Pair Corralation between Cryoport and Shengfeng Development

Given the investment horizon of 90 days Cryoport is expected to under-perform the Shengfeng Development. In addition to that, Cryoport is 1.33 times more volatile than Shengfeng Development Limited. It trades about -0.02 of its total potential returns per unit of risk. Shengfeng Development Limited is currently generating about -0.02 per unit of volatility. If you would invest  129.00  in Shengfeng Development Limited on September 4, 2024 and sell it today you would lose (9.00) from holding Shengfeng Development Limited or give up 6.98% of portfolio value over 90 days.

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

Cryoport  vs.  Shengfeng Development Limited

Cryoport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cryoport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cryoport is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Shengfeng Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shengfeng Development Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Shengfeng Development is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Cryoport and Shengfeng Development

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

The idea behind Cryoport and Shengfeng Development Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.