Correlation Between Guangzhou Tinci and Guizhou Chanhen

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

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

Diversification Opportunities for Guangzhou Tinci and Guizhou Chanhen

0.51

Correlation Coefficient

Guangzhou Tinci  Guizhou Chanhen

Very weak diversification

The 3 months correlation between Guangzhou and Guizhou is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Tinci Materials 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 Guangzhou Tinci 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 Guangzhou Tinci Materials 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 Guangzhou Tinci i.e., Guangzhou Tinci and Guizhou Chanhen go up and down completely randomly.

Pair Corralation between Guangzhou Tinci and Guizhou Chanhen

Assuming the 90 days trading horizon Guangzhou Tinci is expected to generate 6.82 times less return on investment than Guizhou Chanhen. In addition to that, Guangzhou Tinci is 1.48 times more volatile than Guizhou Chanhen Chemical. It trades about 0.01 of its total potential returns per unit of risk. Guizhou Chanhen Chemical is currently generating about 0.06 per unit of volatility. If you would invest  2,271  in Guizhou Chanhen Chemical on October 3, 2024 and sell it today you would earn a total of  189.00  from holding Guizhou Chanhen Chemical or generate 8.32% return on investment over 90 days.

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

Guangzhou Tinci Materials  vs.  Guizhou Chanhen Chemical

Guangzhou Tinci Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou Tinci Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangzhou Tinci 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

Insignificant

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 Guangzhou Tinci and Guizhou Chanhen

The main advantage of trading using opposite Guangzhou Tinci and Guizhou Chanhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Tinci 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 Guangzhou Tinci Materials 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.