Correlation Between Shineco and CHS
Can any of the company-specific risk be diversified away by investing in both Shineco and CHS 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 Shineco and CHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shineco and CHS Inc CL, you can compare the effects of market volatilities on Shineco and CHS 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 Shineco with a short position of CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shineco and CHS.
Diversification Opportunities for Shineco and CHS
Pay attention - limited upside
The 3 months correlation between Shineco and CHS is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Shineco and CHS Inc CL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CL and Shineco 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 Shineco are associated (or correlated) with CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CL has no effect on the direction of Shineco i.e., Shineco and CHS go up and down completely randomly.
Pair Corralation between Shineco and CHS
Given the investment horizon of 90 days Shineco is expected to generate 101.6 times more return on investment than CHS. However, Shineco is 101.6 times more volatile than CHS Inc CL. It trades about 0.04 of its potential returns per unit of risk. CHS Inc CL is currently generating about 0.06 per unit of risk. If you would invest 1,296 in Shineco on August 31, 2024 and sell it today you would lose (1,064) from holding Shineco or give up 82.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shineco vs. CHS Inc CL
Performance |
| Timeline |
| Shineco |
| CHS Inc CL |
Shineco and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shineco and CHS
The main advantage of trading using opposite Shineco and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shineco position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.The idea behind Shineco and CHS Inc CL 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.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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