Correlation Between Anhui Gujing and Zhejiang Yongjin

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

Diversification Opportunities for Anhui Gujing and Zhejiang Yongjin

0.23

Correlation Coefficient

Anhui Gujing  Zhejiang Yongjin

Modest diversification

The 3 months correlation between Anhui and Zhejiang is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Gujing Distillery and Zhejiang Yongjin Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Yongjin Metal 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 Zhejiang Yongjin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Yongjin Metal has no effect on the direction of Anhui Gujing i.e., Anhui Gujing and Zhejiang Yongjin go up and down completely randomly.

Pair Corralation between Anhui Gujing and Zhejiang Yongjin

Assuming the 90 days trading horizon Anhui Gujing is expected to generate 2.98 times less return on investment than Zhejiang Yongjin. In addition to that, Anhui Gujing is 1.11 times more volatile than Zhejiang Yongjin Metal. It trades about 0.04 of its total potential returns per unit of risk. Zhejiang Yongjin Metal is currently generating about 0.12 per unit of volatility. If you would invest  1,866  in Zhejiang Yongjin Metal on December 26, 2024 and sell it today you would earn a total of  234.00  from holding Zhejiang Yongjin Metal or generate 12.54% return on investment over 90 days.

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

Anhui Gujing Distillery  vs.  Zhejiang Yongjin Metal

Anhui Gujing Distillery

Risk-Adjusted Performance

Weak

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

Zhejiang Yongjin Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Yongjin Metal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Yongjin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Gujing and Zhejiang Yongjin

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

The idea behind Anhui Gujing Distillery and Zhejiang Yongjin Metal 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.