Correlation Between Gansu Huangtai and Keda Clean

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

Diversification Opportunities for Gansu Huangtai and Keda Clean

0.22

Correlation Coefficient

Gansu Huangtai  Keda Clean

Modest diversification

The 3 months correlation between Gansu and Keda is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Huangtai Wine marketing and Keda Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keda Clean Energy 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 Keda Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keda Clean Energy has no effect on the direction of Gansu Huangtai i.e., Gansu Huangtai and Keda Clean go up and down completely randomly.

Pair Corralation between Gansu Huangtai and Keda Clean

Assuming the 90 days trading horizon Gansu Huangtai Wine marketing is expected to generate 3.39 times more return on investment than Keda Clean. However, Gansu Huangtai is 3.39 times more volatile than Keda Clean Energy. It trades about 0.14 of its potential returns per unit of risk. Keda Clean Energy is currently generating about -0.15 per unit of risk. If you would invest  1,476  in Gansu Huangtai Wine marketing on October 11, 2024 and sell it today you would earn a total of  226.00  from holding Gansu Huangtai Wine marketing or generate 15.31% return on investment over 90 days.

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

Gansu Huangtai Wine marketing  vs.  Keda Clean Energy

Gansu Huangtai Wine

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Huangtai Wine marketing are ranked lower than 13 (%) 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.

Keda Clean Energy

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Keda Clean Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Keda Clean 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 Keda Clean

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

The idea behind Gansu Huangtai Wine marketing and Keda Clean Energy 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.