Correlation Between Jiangsu Expressway and Shenzhen Investment
Can any of the company-specific risk be diversified away by investing in both Jiangsu Expressway and Shenzhen Investment 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 Jiangsu Expressway and Shenzhen Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jiangsu Expressway Co and Shenzhen Investment Holdings, you can compare the effects of market volatilities on Jiangsu Expressway and Shenzhen Investment 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 Jiangsu Expressway with a short position of Shenzhen Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Expressway and Shenzhen Investment.
Diversification Opportunities for Jiangsu Expressway and Shenzhen Investment
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Jiangsu and Shenzhen is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Expressway Co and Shenzhen Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Investment and Jiangsu Expressway 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 Jiangsu Expressway Co are associated (or correlated) with Shenzhen Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Investment has no effect on the direction of Jiangsu Expressway i.e., Jiangsu Expressway and Shenzhen Investment go up and down completely randomly.
Pair Corralation between Jiangsu Expressway and Shenzhen Investment
Assuming the 90 days horizon Jiangsu Expressway is expected to generate 3.64 times less return on investment than Shenzhen Investment. In addition to that, Jiangsu Expressway is 3.12 times more volatile than Shenzhen Investment Holdings. It trades about 0.02 of its total potential returns per unit of risk. Shenzhen Investment Holdings is currently generating about 0.21 per unit of volatility. If you would invest 21.00 in Shenzhen Investment Holdings on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Shenzhen Investment Holdings or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Jiangsu Expressway Co vs. Shenzhen Investment Holdings
Performance |
| Timeline |
| Jiangsu Expressway |
| Shenzhen Investment |
Jiangsu Expressway and Shenzhen Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiangsu Expressway and Shenzhen Investment
The main advantage of trading using opposite Jiangsu Expressway and Shenzhen Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangsu Expressway position performs unexpectedly, Shenzhen Investment 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 Investment will offset losses from the drop in Shenzhen Investment's long position.| Jiangsu Expressway vs. Lipocine | Jiangsu Expressway vs. Amkor Technology | Jiangsu Expressway vs. Playtika Holding Corp | Jiangsu Expressway vs. Nextnav Acquisition Corp |
| Shenzhen Investment vs. Verra Mobility Corp | Shenzhen Investment vs. HUMANA INC | Shenzhen Investment vs. SCOR PK | Shenzhen Investment vs. Aquagold International |
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 Stocks Directory module to find actively traded stocks across global markets.
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