Correlation Between Jiugui Liquor and Gansu Huangtai

Can any of the company-specific risk be diversified away by investing in both Jiugui Liquor and Gansu Huangtai 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 Jiugui Liquor and Gansu Huangtai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiugui Liquor Co and Gansu Huangtai Wine marketing, you can compare the effects of market volatilities on Jiugui Liquor and Gansu Huangtai 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 Jiugui Liquor with a short position of Gansu Huangtai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiugui Liquor and Gansu Huangtai.

Diversification Opportunities for Jiugui Liquor and Gansu Huangtai

0.21

Correlation Coefficient

Jiugui Liquor  Gansu Huangtai

Modest diversification

The 3 months correlation between Jiugui and Gansu is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Jiugui Liquor Co and Gansu Huangtai Wine marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Huangtai Wine and Jiugui Liquor 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 Jiugui Liquor Co are associated (or correlated) with Gansu Huangtai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Huangtai Wine has no effect on the direction of Jiugui Liquor i.e., Jiugui Liquor and Gansu Huangtai go up and down completely randomly.

Pair Corralation between Jiugui Liquor and Gansu Huangtai

Assuming the 90 days trading horizon Jiugui Liquor Co is expected to generate 0.99 times more return on investment than Gansu Huangtai. However, Jiugui Liquor Co is 1.01 times less risky than Gansu Huangtai. It trades about 0.22 of its potential returns per unit of risk. Gansu Huangtai Wine marketing is currently generating about 0.06 per unit of risk. If you would invest  4,365  in Jiugui Liquor Co on December 4, 2024 and sell it today you would earn a total of  386.00  from holding Jiugui Liquor Co or generate 8.84% return on investment over 90 days.

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

Jiugui Liquor Co  vs.  Gansu Huangtai Wine marketing

Jiugui Liquor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiugui Liquor 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gansu Huangtai Wine

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Huangtai Wine marketing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gansu Huangtai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jiugui Liquor and Gansu Huangtai

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

The idea behind Jiugui Liquor Co and Gansu Huangtai Wine marketing 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.