Correlation Between Thunder Software and Shenzhen Bioeasy

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

Diversification Opportunities for Thunder Software and Shenzhen Bioeasy

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Thunder and Shenzhen is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Software Technology and Shenzhen Bioeasy Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Bioeasy Bio and Thunder Software 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 Thunder Software Technology are associated (or correlated) with Shenzhen Bioeasy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Bioeasy Bio has no effect on the direction of Thunder Software i.e., Thunder Software and Shenzhen Bioeasy go up and down completely randomly.

Pair Corralation between Thunder Software and Shenzhen Bioeasy

Assuming the 90 days trading horizon Thunder Software Technology is expected to generate 0.99 times more return on investment than Shenzhen Bioeasy. However, Thunder Software Technology is 1.01 times less risky than Shenzhen Bioeasy. It trades about -0.01 of its potential returns per unit of risk. Shenzhen Bioeasy Biotechnology is currently generating about -0.02 per unit of risk. If you would invest  10,119  in Thunder Software Technology on October 30, 2024 and sell it today you would lose (3,905) from holding Thunder Software Technology or give up 38.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Thunder Software Technology  vs.  Shenzhen Bioeasy Biotechnology

 Performance 
       Timeline  
Thunder Software Tec 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Thunder Software Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Thunder Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Shenzhen Bioeasy Bio 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shenzhen Bioeasy Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shenzhen Bioeasy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thunder Software and Shenzhen Bioeasy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thunder Software and Shenzhen Bioeasy

The main advantage of trading using opposite Thunder Software and Shenzhen Bioeasy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thunder Software position performs unexpectedly, Shenzhen Bioeasy 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 Bioeasy will offset losses from the drop in Shenzhen Bioeasy's long position.
The idea behind Thunder Software Technology and Shenzhen Bioeasy Biotechnology 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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