Correlation Between Shenzhen Investment and Jiangsu Expressway
Can any of the company-specific risk be diversified away by investing in both Shenzhen Investment and Jiangsu Expressway 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 Shenzhen Investment and Jiangsu Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenzhen Investment Holdings and Jiangsu Expressway Co, you can compare the effects of market volatilities on Shenzhen Investment and Jiangsu Expressway 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 Investment with a short position of Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Investment and Jiangsu Expressway.
Diversification Opportunities for Shenzhen Investment and Jiangsu Expressway
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shenzhen and Jiangsu is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Investment Holdings and Jiangsu Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway and Shenzhen Investment 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 Investment Holdings are associated (or correlated) with Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Shenzhen Investment i.e., Shenzhen Investment and Jiangsu Expressway go up and down completely randomly.
Pair Corralation between Shenzhen Investment and Jiangsu Expressway
Assuming the 90 days horizon Shenzhen Investment Holdings is expected to generate 0.33 times more return on investment than Jiangsu Expressway. However, Shenzhen Investment Holdings is 3.04 times less risky than Jiangsu Expressway. It trades about 0.21 of its potential returns per unit of risk. Jiangsu Expressway Co is currently generating about 0.02 per unit of risk. If you would invest 21.00 in Shenzhen Investment Holdings on August 30, 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 | 100.0% |
| Values | Daily Returns |
Shenzhen Investment Holdings vs. Jiangsu Expressway Co
Performance |
| Timeline |
| Shenzhen Investment |
| Jiangsu Expressway |
Shenzhen Investment and Jiangsu Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Investment and Jiangsu Expressway
The main advantage of trading using opposite Shenzhen Investment and Jiangsu Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Investment position performs unexpectedly, Jiangsu Expressway 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 Jiangsu Expressway will offset losses from the drop in Jiangsu Expressway's long position.| Shenzhen Investment vs. Jiangsu Expressway Co | Shenzhen Investment vs. Jiangsu Expressway | Shenzhen Investment vs. Zhejiang Expressway Co | Shenzhen Investment vs. Yuexiu Transport Infrastructure |
| Jiangsu Expressway vs. Verra Mobility Corp | Jiangsu Expressway vs. HUMANA INC | Jiangsu Expressway vs. Aquagold International | Jiangsu Expressway vs. Barloworld Ltd ADR |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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