Correlation Between De Rucci and Anhui Gujing

Can any of the company-specific risk be diversified away by investing in both De Rucci and Anhui Gujing 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 De Rucci and Anhui Gujing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between De Rucci Healthy and Anhui Gujing Distillery, you can compare the effects of market volatilities on De Rucci and Anhui Gujing 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 De Rucci with a short position of Anhui Gujing. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Rucci and Anhui Gujing.

Diversification Opportunities for De Rucci and Anhui Gujing

-0.14

Correlation Coefficient

De Rucci  Anhui Gujing

Good diversification

The 3 months correlation between 001323 and Anhui is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding De Rucci Healthy and Anhui Gujing Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Gujing Distillery and De Rucci 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 De Rucci Healthy are associated (or correlated) with Anhui Gujing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Gujing Distillery has no effect on the direction of De Rucci i.e., De Rucci and Anhui Gujing go up and down completely randomly.

Pair Corralation between De Rucci and Anhui Gujing

Assuming the 90 days trading horizon De Rucci Healthy is expected to generate 0.87 times more return on investment than Anhui Gujing. However, De Rucci Healthy is 1.14 times less risky than Anhui Gujing. It trades about 0.17 of its potential returns per unit of risk. Anhui Gujing Distillery is currently generating about -0.1 per unit of risk. If you would invest  3,066  in De Rucci Healthy on October 9, 2024 and sell it today you would earn a total of  775.00  from holding De Rucci Healthy or generate 25.28% return on investment over 90 days.

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

De Rucci Healthy  vs.  Anhui Gujing Distillery

De Rucci Healthy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in De Rucci Healthy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, De Rucci sustained solid returns over the last few months and may actually be approaching a breakup point.

Anhui Gujing Distillery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Gujing Distillery 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with De Rucci and Anhui Gujing

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

The idea behind De Rucci Healthy and Anhui Gujing Distillery 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.