Correlation Between Shenyang Huitian and Zhengping RoadBridge

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Can any of the company-specific risk be diversified away by investing in both Shenyang Huitian and Zhengping RoadBridge 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 Shenyang Huitian and Zhengping RoadBridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenyang Huitian Thermal and Zhengping RoadBridge Constr, you can compare the effects of market volatilities on Shenyang Huitian and Zhengping RoadBridge 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 Shenyang Huitian with a short position of Zhengping RoadBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenyang Huitian and Zhengping RoadBridge.

Diversification Opportunities for Shenyang Huitian and Zhengping RoadBridge

ShenyangZhengpingDiversified AwayShenyangZhengpingDiversified Away100%
0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Shenyang and Zhengping is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Huitian Thermal and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge and Shenyang Huitian 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 Shenyang Huitian Thermal are associated (or correlated) with Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of Shenyang Huitian i.e., Shenyang Huitian and Zhengping RoadBridge go up and down completely randomly.

Pair Corralation between Shenyang Huitian and Zhengping RoadBridge

Assuming the 90 days trading horizon Shenyang Huitian Thermal is expected to generate 0.49 times more return on investment than Zhengping RoadBridge. However, Shenyang Huitian Thermal is 2.03 times less risky than Zhengping RoadBridge. It trades about 0.03 of its potential returns per unit of risk. Zhengping RoadBridge Constr is currently generating about -0.1 per unit of risk. If you would invest  334.00  in Shenyang Huitian Thermal on November 25, 2024 and sell it today you would earn a total of  2.00  from holding Shenyang Huitian Thermal or generate 0.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Shenyang Huitian Thermal  vs.  Zhengping RoadBridge Constr

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100102030
JavaScript chart by amCharts 3.21.15000692 603843
       Timeline  
Shenyang Huitian Thermal 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Shenyang Huitian Thermal 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3.544.5
Zhengping RoadBridge 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Zhengping RoadBridge Constr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zhengping RoadBridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.833.23.43.63.844.24.4

Shenyang Huitian and Zhengping RoadBridge Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.05-3.81-2.57-1.33-0.08421.12.273.454.625.8 0.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15000692 603843
       Returns  

Pair Trading with Shenyang Huitian and Zhengping RoadBridge

The main advantage of trading using opposite Shenyang Huitian and Zhengping RoadBridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenyang Huitian position performs unexpectedly, Zhengping RoadBridge 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 Zhengping RoadBridge will offset losses from the drop in Zhengping RoadBridge's long position.
The idea behind Shenyang Huitian Thermal and Zhengping RoadBridge Constr 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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