Correlation Between Gansu Huangtai and Qingdao Baheal

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

Diversification Opportunities for Gansu Huangtai and Qingdao Baheal

0.87

Correlation Coefficient

Gansu Huangtai  Qingdao Baheal

Very poor diversification

The 3 months correlation between Gansu and Qingdao is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Huangtai Wine marketing and Qingdao Baheal Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Baheal Medical 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 Qingdao Baheal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Baheal Medical has no effect on the direction of Gansu Huangtai i.e., Gansu Huangtai and Qingdao Baheal go up and down completely randomly.

Pair Corralation between Gansu Huangtai and Qingdao Baheal

Assuming the 90 days trading horizon Gansu Huangtai Wine marketing is expected to generate 1.09 times more return on investment than Qingdao Baheal. However, Gansu Huangtai is 1.09 times more volatile than Qingdao Baheal Medical. It trades about 0.23 of its potential returns per unit of risk. Qingdao Baheal Medical is currently generating about 0.09 per unit of risk. If you would invest  837.00  in Gansu Huangtai Wine marketing on September 4, 2024 and sell it today you would earn a total of  687.00  from holding Gansu Huangtai Wine marketing or generate 82.08% return on investment over 90 days.

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

Gansu Huangtai Wine marketing  vs.  Qingdao Baheal Medical

Gansu Huangtai Wine

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Huangtai Wine marketing are ranked lower than 18 (%) 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.

Qingdao Baheal Medical

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Gansu Huangtai and Qingdao Baheal

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

The idea behind Gansu Huangtai Wine marketing and Qingdao Baheal Medical 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.