Correlation Between Chenzhou Jingui and Aofu Environmental

Can any of the company-specific risk be diversified away by investing in both Chenzhou Jingui and Aofu Environmental 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 Aofu Environmental 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 Aofu Environmental Technology, you can compare the effects of market volatilities on Chenzhou Jingui and Aofu Environmental 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 Aofu Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenzhou Jingui and Aofu Environmental.

Diversification Opportunities for Chenzhou Jingui and Aofu Environmental

0.72

Correlation Coefficient

Chenzhou Jingui  Aofu Environmental

Poor diversification

The 3 months correlation between Chenzhou and Aofu is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chenzhou Jingui Silver and Aofu Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aofu Environmental 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 Aofu Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aofu Environmental has no effect on the direction of Chenzhou Jingui i.e., Chenzhou Jingui and Aofu Environmental go up and down completely randomly.

Pair Corralation between Chenzhou Jingui and Aofu Environmental

Assuming the 90 days trading horizon Chenzhou Jingui Silver is expected to generate 1.03 times more return on investment than Aofu Environmental. However, Chenzhou Jingui is 1.03 times more volatile than Aofu Environmental Technology. It trades about 0.05 of its potential returns per unit of risk. Aofu Environmental Technology is currently generating about -0.04 per unit of risk. If you would invest  348.00  in Chenzhou Jingui Silver on November 20, 2024 and sell it today you would earn a total of  18.00  from holding Chenzhou Jingui Silver or generate 5.17% return on investment over 90 days.

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

Chenzhou Jingui Silver  vs.  Aofu Environmental Technology

Chenzhou Jingui Silver

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chenzhou Jingui Silver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chenzhou Jingui may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Aofu Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aofu Environmental Technology 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 Chenzhou Jingui and Aofu Environmental

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

The idea behind Chenzhou Jingui Silver and Aofu Environmental Technology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.