Correlation Between CNPC Capital and Gan Yuan

Can any of the company-specific risk be diversified away by investing in both CNPC Capital and Gan Yuan 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 CNPC Capital and Gan Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CNPC Capital Co and Gan Yuan Foods, you can compare the effects of market volatilities on CNPC Capital and Gan Yuan 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 CNPC Capital with a short position of Gan Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNPC Capital and Gan Yuan.

Diversification Opportunities for CNPC Capital and Gan Yuan

-0.69

Correlation Coefficient

CNPC Capital  Gan Yuan

Excellent diversification

The 3 months correlation between CNPC and Gan is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding CNPC Capital Co and Gan Yuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Yuan Foods and CNPC Capital 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 CNPC Capital Co are associated (or correlated) with Gan Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Yuan Foods has no effect on the direction of CNPC Capital i.e., CNPC Capital and Gan Yuan go up and down completely randomly.

Pair Corralation between CNPC Capital and Gan Yuan

Assuming the 90 days trading horizon CNPC Capital is expected to generate 1.05 times less return on investment than Gan Yuan. In addition to that, CNPC Capital is 1.19 times more volatile than Gan Yuan Foods. It trades about 0.02 of its total potential returns per unit of risk. Gan Yuan Foods is currently generating about 0.03 per unit of volatility. If you would invest  7,124  in Gan Yuan Foods on October 11, 2024 and sell it today you would earn a total of  1,596  from holding Gan Yuan Foods or generate 22.4% return on investment over 90 days.

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

CNPC Capital Co  vs.  Gan Yuan Foods

CNPC Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNPC Capital Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gan Yuan Foods

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gan Yuan Foods are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gan Yuan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CNPC Capital and Gan Yuan

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

The idea behind CNPC Capital Co and Gan Yuan Foods 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.