Correlation Between Jiugui Liquor and Hubei Geoway

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

Diversification Opportunities for Jiugui Liquor and Hubei Geoway

0.48

Correlation Coefficient

Jiugui Liquor  Hubei Geoway

Very weak diversification

The 3 months correlation between Jiugui and Hubei is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Jiugui Liquor Co and Hubei Geoway Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Geoway Investment 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 Hubei Geoway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Geoway Investment has no effect on the direction of Jiugui Liquor i.e., Jiugui Liquor and Hubei Geoway go up and down completely randomly.

Pair Corralation between Jiugui Liquor and Hubei Geoway

Assuming the 90 days trading horizon Jiugui Liquor Co is expected to generate 0.77 times more return on investment than Hubei Geoway. However, Jiugui Liquor Co is 1.29 times less risky than Hubei Geoway. It trades about -0.24 of its potential returns per unit of risk. Hubei Geoway Investment is currently generating about -0.23 per unit of risk. If you would invest  5,630  in Jiugui Liquor Co on October 22, 2024 and sell it today you would lose (728.00) from holding Jiugui Liquor Co or give up 12.93% of portfolio value over 90 days.

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

Jiugui Liquor Co  vs.  Hubei Geoway Investment

Jiugui Liquor

Risk-Adjusted Performance

0 of 100

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 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.

Hubei Geoway Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Geoway Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Geoway may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jiugui Liquor and Hubei Geoway

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

The idea behind Jiugui Liquor Co and Hubei Geoway Investment 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.