Correlation Between Advanced Technology and Anhui Huilong

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

By analyzing existing cross correlation between Advanced Technology Materials and Anhui Huilong Agricultural, you can compare the effects of market volatilities on Advanced Technology and Anhui Huilong 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 Advanced Technology with a short position of Anhui Huilong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Technology and Anhui Huilong.

Diversification Opportunities for Advanced Technology and Anhui Huilong

0.18

Correlation Coefficient

Advanced Technology  Anhui Huilong

Average diversification

The 3 months correlation between Advanced and Anhui is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Technology Materials and Anhui Huilong Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Huilong Agricu and Advanced Technology 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 Advanced Technology Materials are associated (or correlated) with Anhui Huilong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Huilong Agricu has no effect on the direction of Advanced Technology i.e., Advanced Technology and Anhui Huilong go up and down completely randomly.

Pair Corralation between Advanced Technology and Anhui Huilong

Assuming the 90 days trading horizon Advanced Technology Materials is expected to generate 1.95 times more return on investment than Anhui Huilong. However, Advanced Technology is 1.95 times more volatile than Anhui Huilong Agricultural. It trades about 0.2 of its potential returns per unit of risk. Anhui Huilong Agricultural is currently generating about 0.1 per unit of risk. If you would invest  1,090  in Advanced Technology Materials on December 11, 2024 and sell it today you would earn a total of  197.00  from holding Advanced Technology Materials or generate 18.07% return on investment over 90 days.

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

Advanced Technology Materials  vs.  Anhui Huilong Agricultural

Advanced Technology

Risk-Adjusted Performance

Insignificant

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

Anhui Huilong Agricu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anhui Huilong Agricultural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Advanced Technology and Anhui Huilong

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

The idea behind Advanced Technology Materials and Anhui Huilong Agricultural 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.