Correlation Between Shanghai Ziyan and Fujian Anjoy

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

Diversification Opportunities for Shanghai Ziyan and Fujian Anjoy

ShanghaiFujianDiversified AwayShanghaiFujianDiversified Away100%
0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Shanghai and Fujian is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Ziyan Foods and Fujian Anjoy Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Anjoy Foods and Shanghai Ziyan 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 Ziyan Foods are associated (or correlated) with Fujian Anjoy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Anjoy Foods has no effect on the direction of Shanghai Ziyan i.e., Shanghai Ziyan and Fujian Anjoy go up and down completely randomly.

Pair Corralation between Shanghai Ziyan and Fujian Anjoy

Assuming the 90 days trading horizon Shanghai Ziyan Foods is expected to generate 0.94 times more return on investment than Fujian Anjoy. However, Shanghai Ziyan Foods is 1.06 times less risky than Fujian Anjoy. It trades about -0.03 of its potential returns per unit of risk. Fujian Anjoy Foods is currently generating about -0.05 per unit of risk. If you would invest  2,593  in Shanghai Ziyan Foods on November 26, 2024 and sell it today you would lose (889.00) from holding Shanghai Ziyan Foods or give up 34.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Shanghai Ziyan Foods  vs.  Fujian Anjoy Foods

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15603057 603345
       Timeline  
Shanghai Ziyan Foods 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Shanghai Ziyan Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb171819202122
Fujian Anjoy Foods 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fujian Anjoy Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7580859095

Shanghai Ziyan and Fujian Anjoy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.33-3.99-2.65-1.31-0.011.292.623.965.296.62 0.030.040.050.060.070.080.09
JavaScript chart by amCharts 3.21.15603057 603345
       Returns  

Pair Trading with Shanghai Ziyan and Fujian Anjoy

The main advantage of trading using opposite Shanghai Ziyan and Fujian Anjoy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Ziyan position performs unexpectedly, Fujian Anjoy 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 Fujian Anjoy will offset losses from the drop in Fujian Anjoy's long position.
The idea behind Shanghai Ziyan Foods and Fujian Anjoy Foods 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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