Correlation Between Shenzhen Hans and Guangxi Guiguan

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

Diversification Opportunities for Shenzhen Hans and Guangxi Guiguan

ShenzhenGuangxiDiversified AwayShenzhenGuangxiDiversified Away100%
0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Shenzhen and Guangxi is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Hans CNC and Guangxi Guiguan Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangxi Guiguan Electric and Shenzhen Hans 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 Shenzhen Hans CNC are associated (or correlated) with Guangxi Guiguan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangxi Guiguan Electric has no effect on the direction of Shenzhen Hans i.e., Shenzhen Hans and Guangxi Guiguan go up and down completely randomly.

Pair Corralation between Shenzhen Hans and Guangxi Guiguan

Assuming the 90 days trading horizon Shenzhen Hans CNC is expected to generate 1.89 times more return on investment than Guangxi Guiguan. However, Shenzhen Hans is 1.89 times more volatile than Guangxi Guiguan Electric. It trades about 0.32 of its potential returns per unit of risk. Guangxi Guiguan Electric is currently generating about -0.1 per unit of risk. If you would invest  3,320  in Shenzhen Hans CNC on November 4, 2024 and sell it today you would earn a total of  486.00  from holding Shenzhen Hans CNC or generate 14.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Shenzhen Hans CNC  vs.  Guangxi Guiguan Electric

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -5051015
JavaScript chart by amCharts 3.21.15301200 600236
       Timeline  
Shenzhen Hans CNC 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Hans CNC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Hans sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanJanFeb3436384042
Guangxi Guiguan Electric 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Guangxi Guiguan Electric are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Guangxi Guiguan 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 3.21.15DecJanJanFeb6.26.46.66.877.2

Shenzhen Hans and Guangxi Guiguan Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.64-7.22-4.8-2.380.04032.454.937.429.91 0.050.100.15
JavaScript chart by amCharts 3.21.15301200 600236
       Returns  

Pair Trading with Shenzhen Hans and Guangxi Guiguan

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

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