Correlation Between Unisplendour Corp and Anhui Fuhuang

Can any of the company-specific risk be diversified away by investing in both Unisplendour Corp and Anhui Fuhuang 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 Unisplendour Corp and Anhui Fuhuang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Unisplendour Corp and Anhui Fuhuang Steel, you can compare the effects of market volatilities on Unisplendour Corp and Anhui Fuhuang 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 Unisplendour Corp with a short position of Anhui Fuhuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unisplendour Corp and Anhui Fuhuang.

Diversification Opportunities for Unisplendour Corp and Anhui Fuhuang

0.64

Correlation Coefficient

Unisplendour Corp  Anhui Fuhuang

Poor diversification

The 3 months correlation between Unisplendour and Anhui is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Unisplendour Corp and Anhui Fuhuang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Fuhuang Steel and Unisplendour Corp 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 Unisplendour Corp are associated (or correlated) with Anhui Fuhuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Fuhuang Steel has no effect on the direction of Unisplendour Corp i.e., Unisplendour Corp and Anhui Fuhuang go up and down completely randomly.

Pair Corralation between Unisplendour Corp and Anhui Fuhuang

Assuming the 90 days trading horizon Unisplendour Corp is expected to generate 1.17 times more return on investment than Anhui Fuhuang. However, Unisplendour Corp is 1.17 times more volatile than Anhui Fuhuang Steel. It trades about -0.01 of its potential returns per unit of risk. Anhui Fuhuang Steel is currently generating about -0.05 per unit of risk. If you would invest  2,896  in Unisplendour Corp on December 27, 2024 and sell it today you would lose (172.00) from holding Unisplendour Corp or give up 5.94% of portfolio value over 90 days.

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

Unisplendour Corp  vs.  Anhui Fuhuang Steel

Unisplendour Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unisplendour Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Unisplendour Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Anhui Fuhuang Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anhui Fuhuang Steel 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.

Pair Trading with Unisplendour Corp and Anhui Fuhuang

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

The idea behind Unisplendour Corp and Anhui Fuhuang Steel 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.