Correlation Between Gansu Huangtai and Hubei Yingtong

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

Diversification Opportunities for Gansu Huangtai and Hubei Yingtong

0.1

Correlation Coefficient

Gansu Huangtai  Hubei Yingtong

Average diversification

The 3 months correlation between Gansu and Hubei is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Huangtai Wine marketing and Hubei Yingtong Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Yingtong Telec 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 Hubei Yingtong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Yingtong Telec has no effect on the direction of Gansu Huangtai i.e., Gansu Huangtai and Hubei Yingtong go up and down completely randomly.

Pair Corralation between Gansu Huangtai and Hubei Yingtong

Assuming the 90 days trading horizon Gansu Huangtai Wine marketing is expected to generate 0.85 times more return on investment than Hubei Yingtong. However, Gansu Huangtai Wine marketing is 1.18 times less risky than Hubei Yingtong. It trades about 0.11 of its potential returns per unit of risk. Hubei Yingtong Telecommunication is currently generating about 0.08 per unit of risk. If you would invest  1,240  in Gansu Huangtai Wine marketing on October 24, 2024 and sell it today you would earn a total of  371.00  from holding Gansu Huangtai Wine marketing or generate 29.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Gansu Huangtai Wine marketing  vs.  Hubei Yingtong Telecommunicati

Gansu Huangtai Wine

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Huangtai Wine marketing are ranked lower than 8 (%) 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.

Hubei Yingtong Telec

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Yingtong Telecommunication are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Yingtong sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gansu Huangtai and Hubei Yingtong

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

The idea behind Gansu Huangtai Wine marketing and Hubei Yingtong Telecommunication 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.