Correlation Between Shenzhen Transsion and Sinocat Environmental
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By analyzing existing cross correlation between Shenzhen Transsion Holdings and Sinocat Environmental Technology, you can compare the effects of market volatilities on Shenzhen Transsion and Sinocat Environmental 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 Shenzhen Transsion with a short position of Sinocat Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Transsion and Sinocat Environmental.
Diversification Opportunities for Shenzhen Transsion and Sinocat Environmental
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shenzhen and Sinocat is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Transsion Holdings and Sinocat Environmental Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinocat Environmental and Shenzhen Transsion 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 Shenzhen Transsion Holdings are associated (or correlated) with Sinocat Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinocat Environmental has no effect on the direction of Shenzhen Transsion i.e., Shenzhen Transsion and Sinocat Environmental go up and down completely randomly.
Pair Corralation between Shenzhen Transsion and Sinocat Environmental
Assuming the 90 days trading horizon Shenzhen Transsion Holdings is expected to generate 1.03 times more return on investment than Sinocat Environmental. However, Shenzhen Transsion is 1.03 times more volatile than Sinocat Environmental Technology. It trades about 0.39 of its potential returns per unit of risk. Sinocat Environmental Technology is currently generating about -0.01 per unit of risk. If you would invest 8,667 in Shenzhen Transsion Holdings on November 7, 2024 and sell it today you would earn a total of 1,372 from holding Shenzhen Transsion Holdings or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Transsion Holdings vs. Sinocat Environmental Technolo
Performance |
| Timeline |
| Shenzhen Transsion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sinocat Environmental |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Shenzhen Transsion and Sinocat Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Transsion and Sinocat Environmental
The main advantage of trading using opposite Shenzhen Transsion and Sinocat Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Transsion position performs unexpectedly, Sinocat Environmental 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 Sinocat Environmental will offset losses from the drop in Sinocat Environmental's long position.The idea behind Shenzhen Transsion Holdings and Sinocat Environmental Technology 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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