Correlation Between Gansu Huangtai and China Greatwall

Can any of the company-specific risk be diversified away by investing in both Gansu Huangtai and China Greatwall 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 Gansu Huangtai and China Greatwall into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gansu Huangtai Wine marketing and China Greatwall Computer, you can compare the effects of market volatilities on Gansu Huangtai and China Greatwall 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 Gansu Huangtai with a short position of China Greatwall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gansu Huangtai and China Greatwall.

Diversification Opportunities for Gansu Huangtai and China Greatwall

-0.45

Correlation Coefficient

Gansu Huangtai  China Greatwall

Very good diversification

The 3 months correlation between Gansu and China is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Huangtai Wine marketing and China Greatwall Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Greatwall Computer and Gansu Huangtai 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 Gansu Huangtai Wine marketing are associated (or correlated) with China Greatwall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Greatwall Computer has no effect on the direction of Gansu Huangtai i.e., Gansu Huangtai and China Greatwall go up and down completely randomly.

Pair Corralation between Gansu Huangtai and China Greatwall

Assuming the 90 days trading horizon Gansu Huangtai Wine marketing is expected to under-perform the China Greatwall. In addition to that, Gansu Huangtai is 1.04 times more volatile than China Greatwall Computer. It trades about -0.06 of its total potential returns per unit of risk. China Greatwall Computer is currently generating about -0.01 per unit of volatility. If you would invest  1,521  in China Greatwall Computer on December 25, 2024 and sell it today you would lose (82.00) from holding China Greatwall Computer or give up 5.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gansu Huangtai Wine marketing  vs.  China Greatwall Computer

Gansu Huangtai Wine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gansu Huangtai Wine marketing 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.

China Greatwall Computer

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gansu Huangtai and China Greatwall

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

The idea behind Gansu Huangtai Wine marketing and China Greatwall Computer 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.