Correlation Between Shuhua Sports and Shenzhen Urban
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By analyzing existing cross correlation between Shuhua Sports Co and Shenzhen Urban Transport, you can compare the effects of market volatilities on Shuhua Sports and Shenzhen Urban 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 Shuhua Sports with a short position of Shenzhen Urban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shuhua Sports and Shenzhen Urban.
Diversification Opportunities for Shuhua Sports and Shenzhen Urban
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shuhua and Shenzhen is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shuhua Sports Co and Shenzhen Urban Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Urban Transport and Shuhua Sports 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 Shuhua Sports Co are associated (or correlated) with Shenzhen Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Urban Transport has no effect on the direction of Shuhua Sports i.e., Shuhua Sports and Shenzhen Urban go up and down completely randomly.
Pair Corralation between Shuhua Sports and Shenzhen Urban
Assuming the 90 days trading horizon Shuhua Sports Co is expected to under-perform the Shenzhen Urban. But the stock apears to be less risky and, when comparing its historical volatility, Shuhua Sports Co is 1.9 times less risky than Shenzhen Urban. The stock trades about -0.01 of its potential returns per unit of risk. The Shenzhen Urban Transport is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,257 in Shenzhen Urban Transport on November 7, 2024 and sell it today you would earn a total of 2,901 from holding Shenzhen Urban Transport or generate 230.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shuhua Sports Co vs. Shenzhen Urban Transport
Performance |
| Timeline |
| Shuhua Sports |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Shenzhen Urban Transport |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shuhua Sports and Shenzhen Urban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shuhua Sports and Shenzhen Urban
The main advantage of trading using opposite Shuhua Sports and Shenzhen Urban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shuhua Sports position performs unexpectedly, Shenzhen Urban 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 Shenzhen Urban will offset losses from the drop in Shenzhen Urban's long position.The idea behind Shuhua Sports Co and Shenzhen Urban Transport 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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