Correlation Between Henan Shuanghui and Ye Chiu

Can any of the company-specific risk be diversified away by investing in both Henan Shuanghui and Ye Chiu 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 Henan Shuanghui and Ye Chiu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Henan Shuanghui Investment and Ye Chiu Metal, you can compare the effects of market volatilities on Henan Shuanghui and Ye Chiu 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 Henan Shuanghui with a short position of Ye Chiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henan Shuanghui and Ye Chiu.

Diversification Opportunities for Henan Shuanghui and Ye Chiu

0.8

Correlation Coefficient

Henan Shuanghui  Ye Chiu

Very poor diversification

The 3 months correlation between Henan and 601388 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Henan Shuanghui Investment and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal and Henan Shuanghui 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 Henan Shuanghui Investment are associated (or correlated) with Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of Henan Shuanghui i.e., Henan Shuanghui and Ye Chiu go up and down completely randomly.

Pair Corralation between Henan Shuanghui and Ye Chiu

Assuming the 90 days trading horizon Henan Shuanghui Investment is expected to generate 0.5 times more return on investment than Ye Chiu. However, Henan Shuanghui Investment is 1.99 times less risky than Ye Chiu. It trades about 0.03 of its potential returns per unit of risk. Ye Chiu Metal is currently generating about 0.0 per unit of risk. If you would invest  2,293  in Henan Shuanghui Investment on September 20, 2024 and sell it today you would earn a total of  327.00  from holding Henan Shuanghui Investment or generate 14.26% return on investment over 90 days.

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

Henan Shuanghui Investment  vs.  Ye Chiu Metal

Henan Shuanghui Inve

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Henan Shuanghui Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Henan Shuanghui may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ye Chiu Metal

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ye Chiu Metal are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ye Chiu sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Henan Shuanghui and Ye Chiu

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

The idea behind Henan Shuanghui Investment and Ye Chiu Metal 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.