Correlation Between Chengdu Xingrong and Inner Mongolia

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Can any of the company-specific risk be diversified away by investing in both Chengdu Xingrong and Inner Mongolia 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 Chengdu Xingrong and Inner Mongolia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chengdu Xingrong Investment and Inner Mongolia Junzheng, you can compare the effects of market volatilities on Chengdu Xingrong and Inner Mongolia 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 Chengdu Xingrong with a short position of Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Xingrong and Inner Mongolia.

Diversification Opportunities for Chengdu Xingrong and Inner Mongolia

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Chengdu and Inner is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Xingrong Investment and Inner Mongolia Junzheng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia Junzheng and Chengdu Xingrong 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 Chengdu Xingrong Investment are associated (or correlated) with Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia Junzheng has no effect on the direction of Chengdu Xingrong i.e., Chengdu Xingrong and Inner Mongolia go up and down completely randomly.

Pair Corralation between Chengdu Xingrong and Inner Mongolia

Assuming the 90 days trading horizon Chengdu Xingrong Investment is expected to generate 0.77 times more return on investment than Inner Mongolia. However, Chengdu Xingrong Investment is 1.29 times less risky than Inner Mongolia. It trades about 0.06 of its potential returns per unit of risk. Inner Mongolia Junzheng is currently generating about 0.03 per unit of risk. If you would invest  474.00  in Chengdu Xingrong Investment on October 9, 2024 and sell it today you would earn a total of  256.00  from holding Chengdu Xingrong Investment or generate 54.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Chengdu Xingrong Investment  vs.  Inner Mongolia Junzheng

 Performance 
       Timeline  
Chengdu Xingrong Inv 

Risk-Adjusted Performance

2 of 100

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

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Inner Mongolia Junzheng are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inner Mongolia sustained solid returns over the last few months and may actually be approaching a breakup point.

Chengdu Xingrong and Inner Mongolia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chengdu Xingrong and Inner Mongolia

The main advantage of trading using opposite Chengdu Xingrong and Inner Mongolia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Xingrong position performs unexpectedly, Inner Mongolia 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 Inner Mongolia will offset losses from the drop in Inner Mongolia's long position.
The idea behind Chengdu Xingrong Investment and Inner Mongolia Junzheng 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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