Correlation Between Gansu Huangtai and Jiugui Liquor

Can any of the company-specific risk be diversified away by investing in both Gansu Huangtai and Jiugui Liquor 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 Jiugui Liquor 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 Jiugui Liquor Co, you can compare the effects of market volatilities on Gansu Huangtai and Jiugui Liquor 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 Jiugui Liquor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gansu Huangtai and Jiugui Liquor.

Diversification Opportunities for Gansu Huangtai and Jiugui Liquor

-0.03

Correlation Coefficient

Gansu Huangtai  Jiugui Liquor

Good diversification

The 3 months correlation between Gansu and Jiugui is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Huangtai Wine marketing and Jiugui Liquor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiugui Liquor 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 Jiugui Liquor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiugui Liquor has no effect on the direction of Gansu Huangtai i.e., Gansu Huangtai and Jiugui Liquor go up and down completely randomly.

Pair Corralation between Gansu Huangtai and Jiugui Liquor

Assuming the 90 days trading horizon Gansu Huangtai Wine marketing is expected to generate 1.58 times more return on investment than Jiugui Liquor. However, Gansu Huangtai is 1.58 times more volatile than Jiugui Liquor Co. It trades about 0.13 of its potential returns per unit of risk. Jiugui Liquor Co is currently generating about -0.03 per unit of risk. If you would invest  1,192  in Gansu Huangtai Wine marketing on October 20, 2024 and sell it today you would earn a total of  471.00  from holding Gansu Huangtai Wine marketing or generate 39.51% return on investment over 90 days.

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

Gansu Huangtai Wine marketing  vs.  Jiugui Liquor Co

Gansu Huangtai Wine

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Huangtai Wine marketing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gansu Huangtai sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiugui Liquor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiugui Liquor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiugui Liquor 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 Jiugui Liquor

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

The idea behind Gansu Huangtai Wine marketing and Jiugui Liquor Co 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.