Correlation Between Aecom Technology and Shanghai Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Aecom Technology and Shanghai Pharmaceuticals 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 Aecom Technology and Shanghai Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecom Technology and Shanghai Pharmaceuticals Holding, you can compare the effects of market volatilities on Aecom Technology and Shanghai Pharmaceuticals 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 Aecom Technology with a short position of Shanghai Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecom Technology and Shanghai Pharmaceuticals.
Diversification Opportunities for Aecom Technology and Shanghai Pharmaceuticals
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aecom and Shanghai is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aecom Technology and Shanghai Pharmaceuticals Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Pharmaceuticals and Aecom Technology 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 Aecom Technology are associated (or correlated) with Shanghai Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Pharmaceuticals has no effect on the direction of Aecom Technology i.e., Aecom Technology and Shanghai Pharmaceuticals go up and down completely randomly.
Pair Corralation between Aecom Technology and Shanghai Pharmaceuticals
Considering the 90-day investment horizon Aecom Technology is expected to generate 0.28 times more return on investment than Shanghai Pharmaceuticals. However, Aecom Technology is 3.62 times less risky than Shanghai Pharmaceuticals. It trades about -0.24 of its potential returns per unit of risk. Shanghai Pharmaceuticals Holding is currently generating about -0.22 per unit of risk. If you would invest 10,669 in Aecom Technology on November 28, 2024 and sell it today you would lose (830.00) from holding Aecom Technology or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aecom Technology vs. Shanghai Pharmaceuticals Holdi
Performance |
| Timeline |
| Aecom Technology |
| Shanghai Pharmaceuticals |
Aecom Technology and Shanghai Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aecom Technology and Shanghai Pharmaceuticals
The main advantage of trading using opposite Aecom Technology and Shanghai Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecom Technology position performs unexpectedly, Shanghai Pharmaceuticals 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 Pharmaceuticals will offset losses from the drop in Shanghai Pharmaceuticals' long position.| Aecom Technology vs. Quanta Services | Aecom Technology vs. KBR Inc | Aecom Technology vs. Fluor | Aecom Technology vs. Tetra Tech |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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