Correlation Between Sichuan Yahua and Vanfund Urban

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Can any of the company-specific risk be diversified away by investing in both Sichuan Yahua and Vanfund Urban 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 Sichuan Yahua and Vanfund Urban into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sichuan Yahua Industrial and Vanfund Urban Investment, you can compare the effects of market volatilities on Sichuan Yahua and Vanfund Urban 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 Sichuan Yahua with a short position of Vanfund Urban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Yahua and Vanfund Urban.

Diversification Opportunities for Sichuan Yahua and Vanfund Urban

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Sichuan and Vanfund is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Yahua Industrial and Vanfund Urban Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanfund Urban Investment and Sichuan Yahua 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 Sichuan Yahua Industrial are associated (or correlated) with Vanfund Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanfund Urban Investment has no effect on the direction of Sichuan Yahua i.e., Sichuan Yahua and Vanfund Urban go up and down completely randomly.

Pair Corralation between Sichuan Yahua and Vanfund Urban

Assuming the 90 days trading horizon Sichuan Yahua Industrial is expected to generate 1.1 times more return on investment than Vanfund Urban. However, Sichuan Yahua is 1.1 times more volatile than Vanfund Urban Investment. It trades about 0.08 of its potential returns per unit of risk. Vanfund Urban Investment is currently generating about 0.08 per unit of risk. If you would invest  1,214  in Sichuan Yahua Industrial on September 23, 2024 and sell it today you would earn a total of  50.00  from holding Sichuan Yahua Industrial or generate 4.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Sichuan Yahua Industrial  vs.  Vanfund Urban Investment

 Performance 
       Timeline  
Sichuan Yahua Industrial 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Yahua Industrial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sichuan Yahua sustained solid returns over the last few months and may actually be approaching a breakup point.
Vanfund Urban Investment 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vanfund Urban Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vanfund Urban sustained solid returns over the last few months and may actually be approaching a breakup point.

Sichuan Yahua and Vanfund Urban Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sichuan Yahua and Vanfund Urban

The main advantage of trading using opposite Sichuan Yahua and Vanfund Urban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Yahua position performs unexpectedly, Vanfund Urban 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 Vanfund Urban will offset losses from the drop in Vanfund Urban's long position.
The idea behind Sichuan Yahua Industrial and Vanfund Urban Investment 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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