Correlation Between Shenmao Technology and FineMat Applied
Can any of the company-specific risk be diversified away by investing in both Shenmao Technology and FineMat Applied 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 Shenmao Technology and FineMat Applied into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenmao Technology and FineMat Applied Materials, you can compare the effects of market volatilities on Shenmao Technology and FineMat Applied 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 Shenmao Technology with a short position of FineMat Applied. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenmao Technology and FineMat Applied.
Diversification Opportunities for Shenmao Technology and FineMat Applied
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shenmao and FineMat is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Shenmao Technology and FineMat Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FineMat Applied Materials and Shenmao Technology 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 Shenmao Technology are associated (or correlated) with FineMat Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FineMat Applied Materials has no effect on the direction of Shenmao Technology i.e., Shenmao Technology and FineMat Applied go up and down completely randomly.
Pair Corralation between Shenmao Technology and FineMat Applied
Assuming the 90 days trading horizon Shenmao Technology is expected to generate 0.87 times more return on investment than FineMat Applied. However, Shenmao Technology is 1.15 times less risky than FineMat Applied. It trades about 0.05 of its potential returns per unit of risk. FineMat Applied Materials is currently generating about 0.03 per unit of risk. If you would invest 4,255 in Shenmao Technology on August 30, 2024 and sell it today you would earn a total of 2,095 from holding Shenmao Technology or generate 49.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenmao Technology vs. FineMat Applied Materials
Performance |
| Timeline |
| Shenmao Technology |
| FineMat Applied Materials |
Shenmao Technology and FineMat Applied Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenmao Technology and FineMat Applied
The main advantage of trading using opposite Shenmao Technology and FineMat Applied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenmao Technology position performs unexpectedly, FineMat Applied 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 FineMat Applied will offset losses from the drop in FineMat Applied's long position.| Shenmao Technology vs. Arcadyan Technology Corp | Shenmao Technology vs. Asia Vital Components | Shenmao Technology vs. WPG Holdings | Shenmao Technology vs. Genius Electronic Optical |
| FineMat Applied vs. Hon Hai Precision | FineMat Applied vs. Delta Electronics | FineMat Applied vs. LARGAN Precision Co | FineMat Applied vs. E Ink Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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