Correlation Between Gansu Huangtai and Yuan Longping

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

Diversification Opportunities for Gansu Huangtai and Yuan Longping

-0.27

Correlation Coefficient

Gansu Huangtai  Yuan Longping

Very good diversification

The 3 months correlation between Gansu and Yuan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Huangtai Wine marketing and Yuan Longping High tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuan Longping High 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 Yuan Longping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuan Longping High has no effect on the direction of Gansu Huangtai i.e., Gansu Huangtai and Yuan Longping go up and down completely randomly.

Pair Corralation between Gansu Huangtai and Yuan Longping

Assuming the 90 days trading horizon Gansu Huangtai Wine marketing is expected to generate 1.65 times more return on investment than Yuan Longping. However, Gansu Huangtai is 1.65 times more volatile than Yuan Longping High tech. It trades about 0.08 of its potential returns per unit of risk. Yuan Longping High tech is currently generating about -0.05 per unit of risk. If you would invest  1,491  in Gansu Huangtai Wine marketing on October 27, 2024 and sell it today you would earn a total of  83.00  from holding Gansu Huangtai Wine marketing or generate 5.57% 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.  Yuan Longping High tech

Gansu Huangtai Wine

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Huangtai Wine marketing are ranked lower than 5 (%) 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.

Yuan Longping High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yuan Longping High tech 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 Gansu Huangtai and Yuan Longping

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

The idea behind Gansu Huangtai Wine marketing and Yuan Longping High tech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.