Correlation Between Techshine Electronics and Chongqing Sulian

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

Diversification Opportunities for Techshine Electronics and Chongqing Sulian

TechshineChongqingDiversified AwayTechshineChongqingDiversified Away100%
0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Techshine and Chongqing is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Techshine Electronics Co and Chongqing Sulian Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Sulian Plastic and Techshine Electronics 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 Techshine Electronics Co are associated (or correlated) with Chongqing Sulian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Sulian Plastic has no effect on the direction of Techshine Electronics i.e., Techshine Electronics and Chongqing Sulian go up and down completely randomly.

Pair Corralation between Techshine Electronics and Chongqing Sulian

Assuming the 90 days trading horizon Techshine Electronics Co is expected to generate 0.44 times more return on investment than Chongqing Sulian. However, Techshine Electronics Co is 2.28 times less risky than Chongqing Sulian. It trades about 0.6 of its potential returns per unit of risk. Chongqing Sulian Plastic is currently generating about 0.13 per unit of risk. If you would invest  2,134  in Techshine Electronics Co on November 25, 2024 and sell it today you would earn a total of  576.00  from holding Techshine Electronics Co or generate 26.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Techshine Electronics Co  vs.  Chongqing Sulian Plastic

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15301379 301397
       Timeline  
Techshine Electronics 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Techshine Electronics Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Techshine Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1820222426
Chongqing Sulian Plastic 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Chongqing Sulian Plastic are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chongqing Sulian sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2426283032343638

Techshine Electronics and Chongqing Sulian Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.68-6.5-4.32-2.140.03632.294.626.959.28 0.0200.0250.0300.0350.0400.0450.050
JavaScript chart by amCharts 3.21.15301379 301397
       Returns  

Pair Trading with Techshine Electronics and Chongqing Sulian

The main advantage of trading using opposite Techshine Electronics and Chongqing Sulian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techshine Electronics position performs unexpectedly, Chongqing Sulian 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 Chongqing Sulian will offset losses from the drop in Chongqing Sulian's long position.
The idea behind Techshine Electronics Co and Chongqing Sulian Plastic 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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