Correlation Between PICC Property and China Shenhua

Can any of the company-specific risk be diversified away by investing in both PICC Property 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 PICC Property and China Shenhua into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PICC Property and and China Shenhua Energy, you can compare the effects of market volatilities on PICC Property 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 PICC Property with a short position of China Shenhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICC Property and China Shenhua.

Diversification Opportunities for PICC Property and China Shenhua

0.46

Correlation Coefficient

PICC Property  China Shenhua

Very weak diversification

The 3 months correlation between PICC and China is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PICC Property and and China Shenhua Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Shenhua Energy and PICC Property 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 PICC Property and 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 Energy has no effect on the direction of PICC Property i.e., PICC Property and China Shenhua go up and down completely randomly.

Pair Corralation between PICC Property and China Shenhua

Assuming the 90 days horizon PICC Property is expected to generate 1.09 times less return on investment than China Shenhua. But when comparing it to its historical volatility, PICC Property and is 1.46 times less risky than China Shenhua. It trades about 0.13 of its potential returns per unit of risk. China Shenhua Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  400.00  in China Shenhua Energy on July 19, 2025 and sell it today you would earn a total of  70.00  from holding China Shenhua Energy or generate 17.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

PICC Property and  vs.  China Shenhua Energy

PICC Property

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, PICC Property showed solid returns over the last few months and may actually be approaching a breakup point.

China Shenhua Energy

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in China Shenhua Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, China Shenhua reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PICC Property and China Shenhua

The main advantage of trading using opposite PICC Property and China Shenhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PICC Property 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 PICC Property and and China Shenhua Energy 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 CEOs Directory module to screen CEOs from public companies around the world.