Correlation Between Chenzhou Jingui and Henan Lantian

Can any of the company-specific risk be diversified away by investing in both Chenzhou Jingui and Henan Lantian 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 Chenzhou Jingui and Henan Lantian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chenzhou Jingui Silver and Henan Lantian Gas, you can compare the effects of market volatilities on Chenzhou Jingui and Henan Lantian 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 Chenzhou Jingui with a short position of Henan Lantian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenzhou Jingui and Henan Lantian.

Diversification Opportunities for Chenzhou Jingui and Henan Lantian

-0.1

Correlation Coefficient

Chenzhou Jingui  Henan Lantian

Good diversification

The 3 months correlation between Chenzhou and Henan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Chenzhou Jingui Silver and Henan Lantian Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henan Lantian Gas and Chenzhou Jingui 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 Chenzhou Jingui Silver are associated (or correlated) with Henan Lantian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henan Lantian Gas has no effect on the direction of Chenzhou Jingui i.e., Chenzhou Jingui and Henan Lantian go up and down completely randomly.

Pair Corralation between Chenzhou Jingui and Henan Lantian

Assuming the 90 days trading horizon Chenzhou Jingui Silver is expected to generate 1.98 times more return on investment than Henan Lantian. However, Chenzhou Jingui is 1.98 times more volatile than Henan Lantian Gas. It trades about 0.05 of its potential returns per unit of risk. Henan Lantian Gas is currently generating about -0.06 per unit of risk. If you would invest  361.00  in Chenzhou Jingui Silver on December 26, 2024 and sell it today you would earn a total of  16.00  from holding Chenzhou Jingui Silver or generate 4.43% return on investment over 90 days.

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

Chenzhou Jingui Silver  vs.  Henan Lantian Gas

Chenzhou Jingui Silver

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chenzhou Jingui Silver are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Chenzhou Jingui is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Henan Lantian Gas

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Chenzhou Jingui and Henan Lantian

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

The idea behind Chenzhou Jingui Silver and Henan Lantian Gas 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 Anywhere module to track or share privately all of your investments from the convenience of any device.