Correlation Between Hubei Yingtong and Western Securities

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Can any of the company-specific risk be diversified away by investing in both Hubei Yingtong and Western 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 Hubei Yingtong and Western Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hubei Yingtong Telecommunication and Western Securities Co, you can compare the effects of market volatilities on Hubei Yingtong and Western 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 Hubei Yingtong with a short position of Western Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Yingtong and Western Securities.

Diversification Opportunities for Hubei Yingtong and Western Securities

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Hubei and Western is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Yingtong Telecommunicati and Western Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Securities and Hubei Yingtong 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 Hubei Yingtong Telecommunication are associated (or correlated) with Western Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Securities has no effect on the direction of Hubei Yingtong i.e., Hubei Yingtong and Western Securities go up and down completely randomly.

Pair Corralation between Hubei Yingtong and Western Securities

Assuming the 90 days trading horizon Hubei Yingtong Telecommunication is expected to under-perform the Western Securities. In addition to that, Hubei Yingtong is 1.59 times more volatile than Western Securities Co. It trades about -0.03 of its total potential returns per unit of risk. Western Securities Co is currently generating about -0.05 per unit of volatility. If you would invest  859.00  in Western Securities Co on October 9, 2024 and sell it today you would lose (89.00) from holding Western Securities Co or give up 10.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hubei Yingtong Telecommunicati  vs.  Western Securities Co

 Performance 
       Timeline  
Hubei Yingtong Telec 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hubei Yingtong Telecommunication 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.
Western Securities 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Western 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.

Hubei Yingtong and Western Securities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hubei Yingtong and Western Securities

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

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