Correlation Between Weiqiao Textile and Shenzhou International

Can any of the company-specific risk be diversified away by investing in both Weiqiao Textile and Shenzhou International 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 Weiqiao Textile and Shenzhou International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Weiqiao Textile and Shenzhou International Group, you can compare the effects of market volatilities on Weiqiao Textile and Shenzhou International 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 Weiqiao Textile with a short position of Shenzhou International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weiqiao Textile and Shenzhou International.

Diversification Opportunities for Weiqiao Textile and Shenzhou International

-0.2

Correlation Coefficient

Weiqiao Textile  Shenzhou International

Good diversification

The 3 months correlation between Weiqiao and Shenzhou is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Weiqiao Textile and Shenzhou International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhou International and Weiqiao Textile 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 Weiqiao Textile are associated (or correlated) with Shenzhou International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhou International has no effect on the direction of Weiqiao Textile i.e., Weiqiao Textile and Shenzhou International go up and down completely randomly.

Pair Corralation between Weiqiao Textile and Shenzhou International

If you would invest  827.00  in Shenzhou International Group on January 25, 2024 and sell it today you would earn a total of  116.00  from holding Shenzhou International Group or generate 14.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Weiqiao Textile  vs.  Shenzhou International Group

Weiqiao Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weiqiao Textile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Shenzhou International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhou International Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Shenzhou International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Weiqiao Textile and Shenzhou International

The main advantage of trading using opposite Weiqiao Textile and Shenzhou International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weiqiao Textile position performs unexpectedly, Shenzhou International 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 Shenzhou International will offset losses from the drop in Shenzhou International's long position.

The idea behind Weiqiao Textile and Shenzhou International Group 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.