Correlation Between Anhui Gujing and Dosilicon

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

Diversification Opportunities for Anhui Gujing and Dosilicon

-0.31

Correlation Coefficient

Anhui Gujing  Dosilicon

Very good diversification

The 3 months correlation between Anhui and Dosilicon is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Gujing Distillery and Dosilicon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dosilicon 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 Dosilicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dosilicon has no effect on the direction of Anhui Gujing i.e., Anhui Gujing and Dosilicon go up and down completely randomly.

Pair Corralation between Anhui Gujing and Dosilicon

Assuming the 90 days trading horizon Anhui Gujing Distillery is expected to under-perform the Dosilicon. But the stock apears to be less risky and, when comparing its historical volatility, Anhui Gujing Distillery is 1.39 times less risky than Dosilicon. The stock trades about -0.06 of its potential returns per unit of risk. The Dosilicon Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,454  in Dosilicon Co on October 23, 2024 and sell it today you would earn a total of  62.00  from holding Dosilicon Co or generate 2.53% return on investment over 90 days.

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

Anhui Gujing Distillery  vs.  Dosilicon Co

Anhui Gujing Distillery

Risk-Adjusted Performance

0 of 100

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.

Dosilicon

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Anhui Gujing and Dosilicon

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

The idea behind Anhui Gujing Distillery and Dosilicon Co 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.