Correlation Between Jiugui Liquor and Tibet Huayu

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

Diversification Opportunities for Jiugui Liquor and Tibet Huayu

0.71

Correlation Coefficient

Jiugui Liquor  Tibet Huayu

Poor diversification

The 3 months correlation between Jiugui and Tibet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Jiugui Liquor Co and Tibet Huayu Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tibet Huayu Mining 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 Tibet Huayu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tibet Huayu Mining has no effect on the direction of Jiugui Liquor i.e., Jiugui Liquor and Tibet Huayu go up and down completely randomly.

Pair Corralation between Jiugui Liquor and Tibet Huayu

Assuming the 90 days trading horizon Jiugui Liquor Co is expected to under-perform the Tibet Huayu. But the stock apears to be less risky and, when comparing its historical volatility, Jiugui Liquor Co is 1.28 times less risky than Tibet Huayu. The stock trades about -0.07 of its potential returns per unit of risk. The Tibet Huayu Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  884.00  in Tibet Huayu Mining on October 4, 2024 and sell it today you would earn a total of  378.00  from holding Tibet Huayu Mining or generate 42.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Jiugui Liquor Co  vs.  Tibet Huayu Mining

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 somewhat strong basic indicators, Jiugui Liquor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tibet Huayu Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tibet Huayu Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tibet Huayu 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 Tibet Huayu

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

The idea behind Jiugui Liquor Co and Tibet Huayu Mining 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..