Correlation Between Hainan Shuangcheng and Guizhou Chanhen

Can any of the company-specific risk be diversified away by investing in both Hainan Shuangcheng and Guizhou Chanhen 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 Hainan Shuangcheng and Guizhou Chanhen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hainan Shuangcheng Pharmaceut and Guizhou Chanhen Chemical, you can compare the effects of market volatilities on Hainan Shuangcheng and Guizhou Chanhen 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 Hainan Shuangcheng with a short position of Guizhou Chanhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Shuangcheng and Guizhou Chanhen.

Diversification Opportunities for Hainan Shuangcheng and Guizhou Chanhen

0.0

Correlation Coefficient

Hainan Shuangcheng  Guizhou Chanhen

Pay attention - limited upside

The 3 months correlation between Hainan and Guizhou is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Shuangcheng Pharmaceut and Guizhou Chanhen Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou Chanhen Chemical and Hainan Shuangcheng 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 Hainan Shuangcheng Pharmaceut are associated (or correlated) with Guizhou Chanhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou Chanhen Chemical has no effect on the direction of Hainan Shuangcheng i.e., Hainan Shuangcheng and Guizhou Chanhen go up and down completely randomly.

Pair Corralation between Hainan Shuangcheng and Guizhou Chanhen

If you would invest (100.00) in Hainan Shuangcheng Pharmaceut on October 11, 2024 and sell it today you would earn a total of  100.00  from holding Hainan Shuangcheng Pharmaceut or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Hainan Shuangcheng Pharmaceut  vs.  Guizhou Chanhen Chemical

Hainan Shuangcheng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hainan Shuangcheng Pharmaceut has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hainan Shuangcheng is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guizhou Chanhen Chemical

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guizhou Chanhen Chemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guizhou Chanhen may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hainan Shuangcheng and Guizhou Chanhen

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

The idea behind Hainan Shuangcheng Pharmaceut and Guizhou Chanhen Chemical 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.