Correlation Between Shanghai Commercial and CHO Pharma
Can any of the company-specific risk be diversified away by investing in both Shanghai Commercial and CHO Pharma 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 Shanghai Commercial and CHO Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Commercial Savings and CHO Pharma, you can compare the effects of market volatilities on Shanghai Commercial and CHO Pharma 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 Shanghai Commercial with a short position of CHO Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Commercial and CHO Pharma.
Diversification Opportunities for Shanghai Commercial and CHO Pharma
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shanghai and CHO is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Commercial Savings and CHO Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHO Pharma and Shanghai Commercial 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 Shanghai Commercial Savings are associated (or correlated) with CHO Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHO Pharma has no effect on the direction of Shanghai Commercial i.e., Shanghai Commercial and CHO Pharma go up and down completely randomly.
Pair Corralation between Shanghai Commercial and CHO Pharma
Assuming the 90 days trading horizon Shanghai Commercial Savings is expected to generate 0.5 times more return on investment than CHO Pharma. However, Shanghai Commercial Savings is 1.98 times less risky than CHO Pharma. It trades about 0.08 of its potential returns per unit of risk. CHO Pharma is currently generating about -0.01 per unit of risk. If you would invest 3,920 in Shanghai Commercial Savings on September 13, 2024 and sell it today you would earn a total of 90.00 from holding Shanghai Commercial Savings or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shanghai Commercial Savings vs. CHO Pharma
Performance |
| Timeline |
| Shanghai Commercial |
| CHO Pharma |
Shanghai Commercial and CHO Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Commercial and CHO Pharma
The main advantage of trading using opposite Shanghai Commercial and CHO Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Commercial position performs unexpectedly, CHO Pharma 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 CHO Pharma will offset losses from the drop in CHO Pharma's long position.| Shanghai Commercial vs. Central Reinsurance Corp | Shanghai Commercial vs. Huaku Development Co | Shanghai Commercial vs. Fubon Financial Holding | Shanghai Commercial vs. Chailease Holding Co |
| CHO Pharma vs. Cheng Mei Materials | CHO Pharma vs. Shanghai Commercial Savings | CHO Pharma vs. Advanced Echem Materials | CHO Pharma vs. Baotek Industrial Materials |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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