Correlation Between Hubeiyichang Transportation and Anhui Deli

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

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

Diversification Opportunities for Hubeiyichang Transportation and Anhui Deli

0.95

Correlation Coefficient

Hubeiyichang Transportation  Anhui Deli

Almost no diversification

The 3 months correlation between Hubeiyichang and Anhui is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Anhui Deli Household in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Deli Household and Hubeiyichang Transportation 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 Hubeiyichang Transportation Group are associated (or correlated) with Anhui Deli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Deli Household has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Anhui Deli go up and down completely randomly.

Pair Corralation between Hubeiyichang Transportation and Anhui Deli

Assuming the 90 days trading horizon Hubeiyichang Transportation is expected to generate 1.36 times less return on investment than Anhui Deli. But when comparing it to its historical volatility, Hubeiyichang Transportation Group is 1.49 times less risky than Anhui Deli. It trades about 0.16 of its potential returns per unit of risk. Anhui Deli Household is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  395.00  in Anhui Deli Household on September 4, 2024 and sell it today you would earn a total of  112.00  from holding Anhui Deli Household or generate 28.35% return on investment over 90 days.

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

Hubeiyichang Transportation Gr  vs.  Anhui Deli Household

Hubeiyichang Transportation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hubeiyichang Transportation Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubeiyichang Transportation sustained solid returns over the last few months and may actually be approaching a breakup point.

Anhui Deli Household

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Hubeiyichang Transportation and Anhui Deli

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

The idea behind Hubeiyichang Transportation Group and Anhui Deli Household 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.