Correlation Between Changzhou Almaden and Hygon Information

Can any of the company-specific risk be diversified away by investing in both Changzhou Almaden and Hygon Information 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 Changzhou Almaden and Hygon Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Changzhou Almaden Co and Hygon Information Technology, you can compare the effects of market volatilities on Changzhou Almaden and Hygon Information 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 Changzhou Almaden with a short position of Hygon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changzhou Almaden and Hygon Information.

Diversification Opportunities for Changzhou Almaden and Hygon Information

-0.57

Correlation Coefficient

Changzhou Almaden  Hygon Information

Excellent diversification

The 3 months correlation between Changzhou and Hygon is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Changzhou Almaden Co and Hygon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hygon Information and Changzhou Almaden 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 Changzhou Almaden Co are associated (or correlated) with Hygon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hygon Information has no effect on the direction of Changzhou Almaden i.e., Changzhou Almaden and Hygon Information go up and down completely randomly.

Pair Corralation between Changzhou Almaden and Hygon Information

Assuming the 90 days trading horizon Changzhou Almaden is expected to generate 14.22 times less return on investment than Hygon Information. But when comparing it to its historical volatility, Changzhou Almaden Co is 1.64 times less risky than Hygon Information. It trades about 0.01 of its potential returns per unit of risk. Hygon Information Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,544  in Hygon Information Technology on October 22, 2024 and sell it today you would earn a total of  5,634  from holding Hygon Information Technology or generate 74.68% return on investment over 90 days.

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

Changzhou Almaden Co  vs.  Hygon Information Technology

Changzhou Almaden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changzhou Almaden Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hygon Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hygon Information Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hygon Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Changzhou Almaden and Hygon Information

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

The idea behind Changzhou Almaden Co and Hygon Information 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.