Correlation Between PICKN PAY and CHINA SHENHUA
Can any of the company-specific risk be diversified away by investing in both PICKN PAY and CHINA SHENHUA 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 PICKN PAY and CHINA SHENHUA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PICKN PAY STORES and CHINA SHENHUA ENA, you can compare the effects of market volatilities on PICKN PAY and CHINA SHENHUA 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 PICKN PAY with a short position of CHINA SHENHUA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICKN PAY and CHINA SHENHUA.
Diversification Opportunities for PICKN PAY and CHINA SHENHUA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PICKN and CHINA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES and CHINA SHENHUA ENA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA SHENHUA ENA and PICKN PAY 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 PICKN PAY STORES are associated (or correlated) with CHINA SHENHUA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA SHENHUA ENA has no effect on the direction of PICKN PAY i.e., PICKN PAY and CHINA SHENHUA go up and down completely randomly.
Pair Corralation between PICKN PAY and CHINA SHENHUA
Assuming the 90 days trading horizon PICKN PAY STORES is expected to under-perform the CHINA SHENHUA. In addition to that, PICKN PAY is 1.41 times more volatile than CHINA SHENHUA ENA. It trades about -0.02 of its total potential returns per unit of risk. CHINA SHENHUA ENA is currently generating about 0.06 per unit of volatility. If you would invest 858.00 in CHINA SHENHUA ENA on September 5, 2024 and sell it today you would earn a total of 712.00 from holding CHINA SHENHUA ENA or generate 82.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PICKN PAY STORES vs. CHINA SHENHUA ENA
Performance |
| Timeline |
| PICKN PAY STORES |
| CHINA SHENHUA ENA |
PICKN PAY and CHINA SHENHUA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PICKN PAY and CHINA SHENHUA
The main advantage of trading using opposite PICKN PAY and CHINA SHENHUA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PICKN PAY position performs unexpectedly, CHINA SHENHUA 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 CHINA SHENHUA will offset losses from the drop in CHINA SHENHUA's long position.The idea behind PICKN PAY STORES and CHINA SHENHUA ENA 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.| CHINA SHENHUA vs. PICKN PAY STORES | CHINA SHENHUA vs. BJs Wholesale Club | CHINA SHENHUA vs. Vastned Retail NV | CHINA SHENHUA vs. Ross Stores |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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