Correlation Between Anhui Deli and Xiangpiaopiao Food

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

By analyzing existing cross correlation between Anhui Deli Household and Xiangpiaopiao Food Co, you can compare the effects of market volatilities on Anhui Deli and Xiangpiaopiao Food 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 Deli with a short position of Xiangpiaopiao Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Deli and Xiangpiaopiao Food.

Diversification Opportunities for Anhui Deli and Xiangpiaopiao Food

0.76

Correlation Coefficient

Anhui Deli  Xiangpiaopiao Food

Poor diversification

The 3 months correlation between Anhui and Xiangpiaopiao is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Deli Household and Xiangpiaopiao Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangpiaopiao Food and Anhui Deli 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 Deli Household are associated (or correlated) with Xiangpiaopiao Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangpiaopiao Food has no effect on the direction of Anhui Deli i.e., Anhui Deli and Xiangpiaopiao Food go up and down completely randomly.

Pair Corralation between Anhui Deli and Xiangpiaopiao Food

Assuming the 90 days trading horizon Anhui Deli is expected to generate 13.53 times less return on investment than Xiangpiaopiao Food. But when comparing it to its historical volatility, Anhui Deli Household is 1.3 times less risky than Xiangpiaopiao Food. It trades about 0.01 of its potential returns per unit of risk. Xiangpiaopiao Food Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,180  in Xiangpiaopiao Food Co on September 26, 2024 and sell it today you would earn a total of  455.00  from holding Xiangpiaopiao Food Co or generate 38.56% return on investment over 90 days.

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

Anhui Deli Household  vs.  Xiangpiaopiao Food Co

Anhui Deli Household

Risk-Adjusted Performance

1 of 100

Weak

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

Xiangpiaopiao Food

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangpiaopiao Food Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangpiaopiao Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Deli and Xiangpiaopiao Food

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

The idea behind Anhui Deli Household and Xiangpiaopiao Food Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.