Correlation Between Zoje Resources and Anhui Gujing

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

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

Diversification Opportunities for Zoje Resources and Anhui Gujing

-0.16

Correlation Coefficient

Zoje Resources  Anhui Gujing

Good diversification

The 3 months correlation between Zoje and Anhui is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Zoje Resources Investment 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 Zoje Resources 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 Zoje Resources Investment 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 Zoje Resources i.e., Zoje Resources and Anhui Gujing go up and down completely randomly.

Pair Corralation between Zoje Resources and Anhui Gujing

Assuming the 90 days trading horizon Zoje Resources Investment is expected to under-perform the Anhui Gujing. In addition to that, Zoje Resources is 3.66 times more volatile than Anhui Gujing Distillery. It trades about -0.14 of its total potential returns per unit of risk. Anhui Gujing Distillery is currently generating about -0.01 per unit of volatility. If you would invest  11,197  in Anhui Gujing Distillery on October 20, 2024 and sell it today you would lose (23.00) from holding Anhui Gujing Distillery or give up 0.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Zoje Resources Investment  vs.  Anhui Gujing Distillery

Zoje Resources Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoje Resources Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zoje Resources 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 somewhat strong basic indicators, Anhui Gujing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zoje Resources and Anhui Gujing

The main advantage of trading using opposite Zoje Resources and Anhui Gujing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoje Resources 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 Zoje Resources Investment 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.