Correlation Between Haoxiangni Jujube and Guangzhou Haozhi

Can any of the company-specific risk be diversified away by investing in both Haoxiangni Jujube and Guangzhou Haozhi 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 Haoxiangni Jujube and Guangzhou Haozhi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Haoxiangni Jujube Co and Guangzhou Haozhi Industrial, you can compare the effects of market volatilities on Haoxiangni Jujube and Guangzhou Haozhi 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 Haoxiangni Jujube with a short position of Guangzhou Haozhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haoxiangni Jujube and Guangzhou Haozhi.

Diversification Opportunities for Haoxiangni Jujube and Guangzhou Haozhi

0.44

Correlation Coefficient

Haoxiangni Jujube  Guangzhou Haozhi

Very weak diversification

The 3 months correlation between Haoxiangni and Guangzhou is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Haoxiangni Jujube Co and Guangzhou Haozhi Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Haozhi Ind and Haoxiangni Jujube 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 Haoxiangni Jujube Co are associated (or correlated) with Guangzhou Haozhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Haozhi Ind has no effect on the direction of Haoxiangni Jujube i.e., Haoxiangni Jujube and Guangzhou Haozhi go up and down completely randomly.

Pair Corralation between Haoxiangni Jujube and Guangzhou Haozhi

Assuming the 90 days trading horizon Haoxiangni Jujube Co is expected to generate 1.21 times more return on investment than Guangzhou Haozhi. However, Haoxiangni Jujube is 1.21 times more volatile than Guangzhou Haozhi Industrial. It trades about 0.17 of its potential returns per unit of risk. Guangzhou Haozhi Industrial is currently generating about 0.1 per unit of risk. If you would invest  571.00  in Haoxiangni Jujube Co on October 22, 2024 and sell it today you would earn a total of  397.00  from holding Haoxiangni Jujube Co or generate 69.53% return on investment over 90 days.

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

Haoxiangni Jujube Co  vs.  Guangzhou Haozhi Industrial

Haoxiangni Jujube

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Haoxiangni Jujube Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haoxiangni Jujube sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangzhou Haozhi Ind

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Haozhi Industrial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Haozhi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Haoxiangni Jujube and Guangzhou Haozhi

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

The idea behind Haoxiangni Jujube Co and Guangzhou Haozhi Industrial 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.