Correlation Between Inspur Software and Shanghai Yanpu

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

Diversification Opportunities for Inspur Software and Shanghai Yanpu

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Inspur and Shanghai is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Inspur Software Co and Shanghai Yanpu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Yanpu Metal and Inspur Software 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 Inspur Software Co are associated (or correlated) with Shanghai Yanpu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Yanpu Metal has no effect on the direction of Inspur Software i.e., Inspur Software and Shanghai Yanpu go up and down completely randomly.

Pair Corralation between Inspur Software and Shanghai Yanpu

Assuming the 90 days trading horizon Inspur Software Co is expected to under-perform the Shanghai Yanpu. But the stock apears to be less risky and, when comparing its historical volatility, Inspur Software Co is 1.15 times less risky than Shanghai Yanpu. The stock trades about -0.2 of its potential returns per unit of risk. The Shanghai Yanpu Metal is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,815  in Shanghai Yanpu Metal on September 12, 2024 and sell it today you would earn a total of  72.00  from holding Shanghai Yanpu Metal or generate 1.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Inspur Software Co  vs.  Shanghai Yanpu Metal

 Performance 
       Timeline  
Inspur Software 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Inspur Software Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inspur Software sustained solid returns over the last few months and may actually be approaching a breakup point.
Shanghai Yanpu Metal 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Yanpu Metal are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Yanpu sustained solid returns over the last few months and may actually be approaching a breakup point.

Inspur Software and Shanghai Yanpu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Inspur Software and Shanghai Yanpu

The main advantage of trading using opposite Inspur Software and Shanghai Yanpu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspur Software position performs unexpectedly, Shanghai Yanpu 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 Shanghai Yanpu will offset losses from the drop in Shanghai Yanpu's long position.
The idea behind Inspur Software Co and Shanghai Yanpu Metal 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.
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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