Correlation Between Anhui Huilong and Iat Automobile

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

By analyzing existing cross correlation between Anhui Huilong Agricultural and Iat Automobile Technology, you can compare the effects of market volatilities on Anhui Huilong and Iat Automobile 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 Anhui Huilong with a short position of Iat Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Huilong and Iat Automobile.

Diversification Opportunities for Anhui Huilong and Iat Automobile

0.8

Correlation Coefficient

Anhui Huilong  Iat Automobile

Very poor diversification

The 3 months correlation between Anhui and Iat is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Huilong Agricultural and Iat Automobile Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iat Automobile Technology and Anhui Huilong 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 Anhui Huilong Agricultural are associated (or correlated) with Iat Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iat Automobile Technology has no effect on the direction of Anhui Huilong i.e., Anhui Huilong and Iat Automobile go up and down completely randomly.

Pair Corralation between Anhui Huilong and Iat Automobile

Assuming the 90 days trading horizon Anhui Huilong Agricultural is expected to generate 0.54 times more return on investment than Iat Automobile. However, Anhui Huilong Agricultural is 1.86 times less risky than Iat Automobile. It trades about -0.44 of its potential returns per unit of risk. Iat Automobile Technology is currently generating about -0.24 per unit of risk. If you would invest  624.00  in Anhui Huilong Agricultural on October 11, 2024 and sell it today you would lose (96.00) from holding Anhui Huilong Agricultural or give up 15.38% of portfolio value over 90 days.

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

Anhui Huilong Agricultural  vs.  Iat Automobile Technology

Anhui Huilong Agricu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Huilong Agricultural are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Anhui Huilong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Iat Automobile Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iat Automobile Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iat Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Huilong and Iat Automobile

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

The idea behind Anhui Huilong Agricultural and Iat Automobile Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.