Correlation Between Anhui Gujing and China Asset

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

By analyzing existing cross correlation between Anhui Gujing Distillery and China Asset Management, you can compare the effects of market volatilities on Anhui Gujing and China Asset 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 Anhui Gujing with a short position of China Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Gujing and China Asset.

Diversification Opportunities for Anhui Gujing and China Asset

-0.87

Correlation Coefficient

Anhui Gujing  China Asset

Pay attention - limited upside

The 3 months correlation between Anhui and China is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Gujing Distillery and China Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Asset Management and Anhui Gujing 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 Anhui Gujing Distillery are associated (or correlated) with China Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Asset Management has no effect on the direction of Anhui Gujing i.e., Anhui Gujing and China Asset go up and down completely randomly.

Pair Corralation between Anhui Gujing and China Asset

Assuming the 90 days trading horizon Anhui Gujing Distillery is expected to under-perform the China Asset. In addition to that, Anhui Gujing is 2.48 times more volatile than China Asset Management. It trades about -0.03 of its total potential returns per unit of risk. China Asset Management is currently generating about 0.08 per unit of volatility. If you would invest  269.00  in China Asset Management on December 2, 2024 and sell it today you would earn a total of  113.00  from holding China Asset Management or generate 42.01% return on investment over 90 days.

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

Anhui Gujing Distillery  vs.  China Asset Management

Anhui Gujing Distillery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anhui Gujing Distillery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

China Asset Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in China Asset Management are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Asset sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Gujing and China Asset

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

The idea behind Anhui Gujing Distillery and China Asset Management 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.