Correlation Between Wangneng Environment and Cansino Biologics

Can any of the company-specific risk be diversified away by investing in both Wangneng Environment and Cansino Biologics 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 Wangneng Environment and Cansino Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wangneng Environment Co and Cansino Biologics, you can compare the effects of market volatilities on Wangneng Environment and Cansino Biologics 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 Wangneng Environment with a short position of Cansino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wangneng Environment and Cansino Biologics.

Diversification Opportunities for Wangneng Environment and Cansino Biologics

0.67

Correlation Coefficient

Wangneng Environment  Cansino Biologics

Poor diversification

The 3 months correlation between Wangneng and Cansino is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Wangneng Environment Co and Cansino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cansino Biologics and Wangneng Environment 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 Wangneng Environment Co are associated (or correlated) with Cansino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cansino Biologics has no effect on the direction of Wangneng Environment i.e., Wangneng Environment and Cansino Biologics go up and down completely randomly.

Pair Corralation between Wangneng Environment and Cansino Biologics

Assuming the 90 days trading horizon Wangneng Environment is expected to generate 11.83 times less return on investment than Cansino Biologics. But when comparing it to its historical volatility, Wangneng Environment Co is 2.44 times less risky than Cansino Biologics. It trades about 0.01 of its potential returns per unit of risk. Cansino Biologics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,745  in Cansino Biologics on October 10, 2024 and sell it today you would earn a total of  96.00  from holding Cansino Biologics or generate 1.67% return on investment over 90 days.

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

Wangneng Environment Co  vs.  Cansino Biologics

Wangneng Environment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wangneng Environment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wangneng Environment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cansino Biologics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cansino Biologics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cansino Biologics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wangneng Environment and Cansino Biologics

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

The idea behind Wangneng Environment Co and Cansino Biologics 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 Commodity Directory module to find actively traded commodities issued by global exchanges.