Correlation Between Shan Loong and Provision Information
Can any of the company-specific risk be diversified away by investing in both Shan Loong and Provision Information 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 Shan Loong and Provision Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shan Loong Transportation Co and Provision Information CoLtd, you can compare the effects of market volatilities on Shan Loong and Provision Information 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 Shan Loong with a short position of Provision Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shan Loong and Provision Information.
Diversification Opportunities for Shan Loong and Provision Information
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shan and Provision is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shan Loong Transportation Co and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information and Shan Loong 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 Shan Loong Transportation Co are associated (or correlated) with Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of Shan Loong i.e., Shan Loong and Provision Information go up and down completely randomly.
Pair Corralation between Shan Loong and Provision Information
Assuming the 90 days trading horizon Shan Loong Transportation Co is expected to under-perform the Provision Information. But the stock apears to be less risky and, when comparing its historical volatility, Shan Loong Transportation Co is 1.21 times less risky than Provision Information. The stock trades about -0.18 of its potential returns per unit of risk. The Provision Information CoLtd is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 8,892 in Provision Information CoLtd on November 3, 2024 and sell it today you would lose (1,492) from holding Provision Information CoLtd or give up 16.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shan Loong Transportation Co vs. Provision Information CoLtd
Performance |
| Timeline |
| Shan Loong Transport |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Provision Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Shan Loong and Provision Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shan Loong and Provision Information
The main advantage of trading using opposite Shan Loong and Provision Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shan Loong position performs unexpectedly, Provision Information 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 Provision Information will offset losses from the drop in Provision Information's long position.The idea behind Shan Loong Transportation Co and Provision Information CoLtd 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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