Correlation Between Gansu Huangtai and Fujian Longzhou

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

Diversification Opportunities for Gansu Huangtai and Fujian Longzhou

-0.01

Correlation Coefficient

Gansu Huangtai  Fujian Longzhou

Good diversification

The 3 months correlation between Gansu and Fujian is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Huangtai Wine marketing and Fujian Longzhou Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Longzhou Tran 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 Fujian Longzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Longzhou Tran has no effect on the direction of Gansu Huangtai i.e., Gansu Huangtai and Fujian Longzhou go up and down completely randomly.

Pair Corralation between Gansu Huangtai and Fujian Longzhou

Assuming the 90 days trading horizon Gansu Huangtai Wine marketing is expected to under-perform the Fujian Longzhou. In addition to that, Gansu Huangtai is 1.21 times more volatile than Fujian Longzhou Transportation. It trades about -0.06 of its total potential returns per unit of risk. Fujian Longzhou Transportation is currently generating about 0.13 per unit of volatility. If you would invest  427.00  in Fujian Longzhou Transportation on December 25, 2024 and sell it today you would earn a total of  88.00  from holding Fujian Longzhou Transportation or generate 20.61% 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.  Fujian Longzhou Transportation

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.

Fujian Longzhou Tran

Risk-Adjusted Performance

Good

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

Pair Trading with Gansu Huangtai and Fujian Longzhou

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

The idea behind Gansu Huangtai Wine marketing and Fujian Longzhou Transportation 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.