Correlation Between Ardentec and Sheng Yu
Can any of the company-specific risk be diversified away by investing in both Ardentec and Sheng Yu 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 Ardentec and Sheng Yu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ardentec and Sheng Yu Steel, you can compare the effects of market volatilities on Ardentec and Sheng Yu 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 Ardentec with a short position of Sheng Yu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ardentec and Sheng Yu.
Diversification Opportunities for Ardentec and Sheng Yu
Average diversification
The 3 months correlation between Ardentec and Sheng is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ardentec and Sheng Yu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sheng Yu Steel and Ardentec 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 Ardentec are associated (or correlated) with Sheng Yu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sheng Yu Steel has no effect on the direction of Ardentec i.e., Ardentec and Sheng Yu go up and down completely randomly.
Pair Corralation between Ardentec and Sheng Yu
Assuming the 90 days trading horizon Ardentec is expected to under-perform the Sheng Yu. In addition to that, Ardentec is 2.64 times more volatile than Sheng Yu Steel. It trades about -0.08 of its total potential returns per unit of risk. Sheng Yu Steel is currently generating about -0.07 per unit of volatility. If you would invest 2,505 in Sheng Yu Steel on September 14, 2024 and sell it today you would lose (20.00) from holding Sheng Yu Steel or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ardentec vs. Sheng Yu Steel
Performance |
| Timeline |
| Ardentec |
| Sheng Yu Steel |
Ardentec and Sheng Yu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ardentec and Sheng Yu
The main advantage of trading using opposite Ardentec and Sheng Yu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardentec position performs unexpectedly, Sheng Yu 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 Sheng Yu will offset losses from the drop in Sheng Yu's long position.| Ardentec vs. Grand Ocean Retail | Ardentec vs. Level Biotechnology | Ardentec vs. Trade Van Information Services | Ardentec vs. STARLUX Airlines Co |
| Sheng Yu vs. Tainan Spinning Co | Sheng Yu vs. Lealea Enterprise Co | Sheng Yu vs. China Petrochemical Development | Sheng Yu vs. Ruentex Development Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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