Correlation Between Corning Incorporated and Shenzhen Investment

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

By analyzing existing cross correlation between Corning Incorporated and Shenzhen Investment Bay, you can compare the effects of market volatilities on Corning Incorporated and Shenzhen Investment 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 Corning Incorporated with a short position of Shenzhen Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corning Incorporated and Shenzhen Investment.

Diversification Opportunities for Corning Incorporated and Shenzhen Investment

0.63

Correlation Coefficient

Corning Incorporated  Shenzhen Investment

Poor diversification

The 3 months correlation between Corning and Shenzhen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Corning Incorporated and Shenzhen Investment Bay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Investment Bay and Corning Incorporated 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 Corning Incorporated are associated (or correlated) with Shenzhen Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Investment Bay has no effect on the direction of Corning Incorporated i.e., Corning Incorporated and Shenzhen Investment go up and down completely randomly.

Pair Corralation between Corning Incorporated and Shenzhen Investment

Considering the 90-day investment horizon Corning Incorporated is expected to generate 12.1 times more return on investment than Shenzhen Investment. However, Corning Incorporated is 12.1 times more volatile than Shenzhen Investment Bay. It trades about 0.23 of its potential returns per unit of risk. Shenzhen Investment Bay is currently generating about -0.22 per unit of risk. If you would invest  4,674  in Corning Incorporated on September 5, 2024 and sell it today you would earn a total of  243.00  from holding Corning Incorporated or generate 5.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Corning Incorporated  vs.  Shenzhen Investment Bay

Corning Incorporated

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Corning Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Investment Bay

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Investment Bay are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Shenzhen Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corning Incorporated and Shenzhen Investment

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

The idea behind Corning Incorporated and Shenzhen Investment Bay 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.