Correlation Between Hubeiyichang Transportation and Caitong Securities

Can any of the company-specific risk be diversified away by investing in both Hubeiyichang Transportation and Caitong Securities 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 Caitong Securities 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 Caitong Securities Co, you can compare the effects of market volatilities on Hubeiyichang Transportation and Caitong Securities 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 Caitong Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Caitong Securities.

Diversification Opportunities for Hubeiyichang Transportation and Caitong Securities

0.49

Correlation Coefficient

Hubeiyichang Transportation  Caitong Securities

Very weak diversification

The 3 months correlation between Hubeiyichang and Caitong is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Caitong Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caitong Securities 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 Caitong Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caitong Securities has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Caitong Securities go up and down completely randomly.

Pair Corralation between Hubeiyichang Transportation and Caitong Securities

Assuming the 90 days trading horizon Hubeiyichang Transportation Group is expected to generate 0.77 times more return on investment than Caitong Securities. However, Hubeiyichang Transportation Group is 1.3 times less risky than Caitong Securities. It trades about 0.04 of its potential returns per unit of risk. Caitong Securities Co is currently generating about -0.07 per unit of risk. If you would invest  509.00  in Hubeiyichang Transportation Group on December 29, 2024 and sell it today you would earn a total of  13.00  from holding Hubeiyichang Transportation Group or generate 2.55% return on investment over 90 days.

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

Hubeiyichang Transportation Gr  vs.  Caitong Securities Co

Hubeiyichang Transportation

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hubeiyichang Transportation Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hubeiyichang Transportation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Caitong Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caitong Securities 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.

Pair Trading with Hubeiyichang Transportation and Caitong Securities

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

The idea behind Hubeiyichang Transportation Group and Caitong Securities 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.