Correlation Between Beijing Shunxin and Hunan Investment

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

Diversification Opportunities for Beijing Shunxin and Hunan Investment

BeijingHunanDiversified AwayBeijingHunanDiversified Away100%
0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Beijing and Hunan is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Shunxin Agriculture and Hunan Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Investment and Beijing Shunxin 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 Beijing Shunxin Agriculture are associated (or correlated) with Hunan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Investment has no effect on the direction of Beijing Shunxin i.e., Beijing Shunxin and Hunan Investment go up and down completely randomly.

Pair Corralation between Beijing Shunxin and Hunan Investment

If you would invest  528.00  in Hunan Investment Group on November 21, 2024 and sell it today you would lose (12.00) from holding Hunan Investment Group or give up 2.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Beijing Shunxin Agriculture  vs.  Hunan Investment Group

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15000860 000548
       Timeline  
Beijing Shunxin Agri 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Beijing Shunxin Agriculture 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb161718192021
Hunan Investment 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hunan Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hunan Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb55.566.57

Beijing Shunxin and Hunan Investment Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.42-2.56-1.7-0.850.00.711.442.172.93.63 0.050.060.070.080.090.10
JavaScript chart by amCharts 3.21.15000860 000548
       Returns  

Pair Trading with Beijing Shunxin and Hunan Investment

The main advantage of trading using opposite Beijing Shunxin and Hunan Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Shunxin position performs unexpectedly, Hunan Investment 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 Hunan Investment will offset losses from the drop in Hunan Investment's long position.
The idea behind Beijing Shunxin Agriculture and Hunan Investment Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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