Correlation Between Anhui Gujing and China Publishing

Can any of the company-specific risk be diversified away by investing in both Anhui Gujing and China Publishing 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 Publishing 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 Publishing Media, you can compare the effects of market volatilities on Anhui Gujing and China Publishing 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 Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Gujing and China Publishing.

Diversification Opportunities for Anhui Gujing and China Publishing

0.58

Correlation Coefficient

Anhui Gujing  China Publishing

Very weak diversification

The 3 months correlation between Anhui and China is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Gujing Distillery and China Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Publishing Media 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 Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Publishing Media has no effect on the direction of Anhui Gujing i.e., Anhui Gujing and China Publishing go up and down completely randomly.

Pair Corralation between Anhui Gujing and China Publishing

Assuming the 90 days trading horizon Anhui Gujing Distillery is expected to under-perform the China Publishing. But the stock apears to be less risky and, when comparing its historical volatility, Anhui Gujing Distillery is 1.12 times less risky than China Publishing. The stock trades about -0.17 of its potential returns per unit of risk. The China Publishing Media is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  857.00  in China Publishing Media on September 20, 2024 and sell it today you would lose (42.00) from holding China Publishing Media or give up 4.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Anhui Gujing Distillery  vs.  China Publishing Media

Anhui Gujing Distillery

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Gujing Distillery are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Gujing sustained solid returns over the last few months and may actually be approaching a breakup point.

China Publishing Media

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Publishing Media are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Publishing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Gujing and China Publishing

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

The idea behind Anhui Gujing Distillery and China Publishing Media 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 Global Correlations module to find global opportunities by holding instruments from different markets.