Correlation Between Shanghai Phichem and Malion New

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

Diversification Opportunities for Shanghai Phichem and Malion New

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Shanghai and Malion is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Phichem Material and Malion New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malion New Materials and Shanghai Phichem 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 Shanghai Phichem Material are associated (or correlated) with Malion New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malion New Materials has no effect on the direction of Shanghai Phichem i.e., Shanghai Phichem and Malion New go up and down completely randomly.

Pair Corralation between Shanghai Phichem and Malion New

Assuming the 90 days trading horizon Shanghai Phichem Material is expected to generate 1.04 times more return on investment than Malion New. However, Shanghai Phichem is 1.04 times more volatile than Malion New Materials. It trades about 0.0 of its potential returns per unit of risk. Malion New Materials is currently generating about -0.03 per unit of risk. If you would invest  1,787  in Shanghai Phichem Material on October 15, 2024 and sell it today you would lose (329.00) from holding Shanghai Phichem Material or give up 18.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Shanghai Phichem Material  vs.  Malion New Materials

 Performance 
       Timeline  
Shanghai Phichem Material 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Phichem Material are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Phichem may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Malion New Materials 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Malion New Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malion New may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shanghai Phichem and Malion New Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shanghai Phichem and Malion New

The main advantage of trading using opposite Shanghai Phichem and Malion New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Phichem position performs unexpectedly, Malion New 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 Malion New will offset losses from the drop in Malion New's long position.
The idea behind Shanghai Phichem Material and Malion New Materials 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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