Correlation Between Haima Automobile and Sichuan Fulin

Can any of the company-specific risk be diversified away by investing in both Haima Automobile and Sichuan Fulin 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 Haima Automobile and Sichuan Fulin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Haima Automobile Group and Sichuan Fulin Transportation, you can compare the effects of market volatilities on Haima Automobile and Sichuan Fulin 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 Haima Automobile with a short position of Sichuan Fulin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haima Automobile and Sichuan Fulin.

Diversification Opportunities for Haima Automobile and Sichuan Fulin

0.47

Correlation Coefficient

Haima Automobile  Sichuan Fulin

Very weak diversification

The 3 months correlation between Haima and Sichuan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Haima Automobile Group and Sichuan Fulin Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Fulin Transp and Haima Automobile 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 Haima Automobile Group are associated (or correlated) with Sichuan Fulin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Fulin Transp has no effect on the direction of Haima Automobile i.e., Haima Automobile and Sichuan Fulin go up and down completely randomly.

Pair Corralation between Haima Automobile and Sichuan Fulin

Assuming the 90 days trading horizon Haima Automobile Group is expected to generate 1.18 times more return on investment than Sichuan Fulin. However, Haima Automobile is 1.18 times more volatile than Sichuan Fulin Transportation. It trades about 0.01 of its potential returns per unit of risk. Sichuan Fulin Transportation is currently generating about 0.0 per unit of risk. If you would invest  458.00  in Haima Automobile Group on October 9, 2024 and sell it today you would lose (56.00) from holding Haima Automobile Group or give up 12.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Haima Automobile Group  vs.  Sichuan Fulin Transportation

Haima Automobile

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haima Automobile Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haima Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Sichuan Fulin Transp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Fulin Transportation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sichuan Fulin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Haima Automobile and Sichuan Fulin

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

The idea behind Haima Automobile Group and Sichuan Fulin Transportation 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.