Correlation Between Shui Mu and Victory New
Can any of the company-specific risk be diversified away by investing in both Shui Mu and Victory New 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 Shui Mu and Victory New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shui Mu International Co and Victory New Materials, you can compare the effects of market volatilities on Shui Mu and Victory New 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 Shui Mu with a short position of Victory New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shui Mu and Victory New.
Diversification Opportunities for Shui Mu and Victory New
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shui and Victory is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shui Mu International Co and Victory New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory New Materials and Shui Mu 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 Shui Mu International Co are associated (or correlated) with Victory New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory New Materials has no effect on the direction of Shui Mu i.e., Shui Mu and Victory New go up and down completely randomly.
Pair Corralation between Shui Mu and Victory New
Assuming the 90 days trading horizon Shui Mu International Co is expected to generate 0.69 times more return on investment than Victory New. However, Shui Mu International Co is 1.45 times less risky than Victory New. It trades about -0.07 of its potential returns per unit of risk. Victory New Materials is currently generating about -0.33 per unit of risk. If you would invest 1,190 in Shui Mu International Co on September 2, 2024 and sell it today you would lose (10.00) from holding Shui Mu International Co or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shui Mu International Co vs. Victory New Materials
Performance |
| Timeline |
| Shui Mu International |
| Victory New Materials |
Shui Mu and Victory New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shui Mu and Victory New
The main advantage of trading using opposite Shui Mu and Victory New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shui Mu position performs unexpectedly, Victory New 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 Victory New will offset losses from the drop in Victory New's long position.| Shui Mu vs. Feng Tay Enterprises | Shui Mu vs. Pou Chen Corp | Shui Mu vs. Fulgent Sun International | Shui Mu vs. Eminent Luggage |
| Victory New vs. Asia Plastic Recycling | Victory New vs. Hunya Foods Co | Victory New vs. Jinli Group Holdings | Victory New vs. Kwong Fong Industries |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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