Correlation Between Shandong Polymer and Zhende Medical

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Shandong Polymer and Zhende Medical 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 Shandong Polymer and Zhende Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shandong Polymer Biochemicals and Zhende Medical Co, you can compare the effects of market volatilities on Shandong Polymer and Zhende Medical 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 Shandong Polymer with a short position of Zhende Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Polymer and Zhende Medical.

Diversification Opportunities for Shandong Polymer and Zhende Medical

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Shandong and Zhende is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Polymer Biochemicals and Zhende Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhende Medical and Shandong Polymer 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 Shandong Polymer Biochemicals are associated (or correlated) with Zhende Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhende Medical has no effect on the direction of Shandong Polymer i.e., Shandong Polymer and Zhende Medical go up and down completely randomly.

Pair Corralation between Shandong Polymer and Zhende Medical

Assuming the 90 days trading horizon Shandong Polymer Biochemicals is expected to generate 2.76 times more return on investment than Zhende Medical. However, Shandong Polymer is 2.76 times more volatile than Zhende Medical Co. It trades about 0.07 of its potential returns per unit of risk. Zhende Medical Co is currently generating about -0.08 per unit of risk. If you would invest  438.00  in Shandong Polymer Biochemicals on August 28, 2024 and sell it today you would earn a total of  21.00  from holding Shandong Polymer Biochemicals or generate 4.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Shandong Polymer Biochemicals  vs.  Zhende Medical Co

 Performance 
       Timeline  
Shandong Polymer Bio 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Polymer Biochemicals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Polymer sustained solid returns over the last few months and may actually be approaching a breakup point.
Zhende Medical 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Zhende Medical Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhende Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Shandong Polymer and Zhende Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shandong Polymer and Zhende Medical

The main advantage of trading using opposite Shandong Polymer and Zhende Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Polymer position performs unexpectedly, Zhende Medical 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 Zhende Medical will offset losses from the drop in Zhende Medical's long position.
The idea behind Shandong Polymer Biochemicals and Zhende Medical Co 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.
Check out your portfolio center.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

Other Complementary Tools

USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
CEOs Directory
Screen CEOs from public companies around the world