Correlation Between Gan Yuan and Hygon Information

Can any of the company-specific risk be diversified away by investing in both Gan Yuan and Hygon Information 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 Gan Yuan and Hygon Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gan Yuan Foods and Hygon Information Technology, you can compare the effects of market volatilities on Gan Yuan and Hygon Information 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 Gan Yuan with a short position of Hygon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gan Yuan and Hygon Information.

Diversification Opportunities for Gan Yuan and Hygon Information

-0.14

Correlation Coefficient

Gan Yuan  Hygon Information

Good diversification

The 3 months correlation between Gan and Hygon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gan Yuan Foods and Hygon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hygon Information and Gan Yuan 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 Gan Yuan Foods are associated (or correlated) with Hygon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hygon Information has no effect on the direction of Gan Yuan i.e., Gan Yuan and Hygon Information go up and down completely randomly.

Pair Corralation between Gan Yuan and Hygon Information

Assuming the 90 days trading horizon Gan Yuan Foods is expected to under-perform the Hygon Information. But the stock apears to be less risky and, when comparing its historical volatility, Gan Yuan Foods is 1.42 times less risky than Hygon Information. The stock trades about -0.11 of its potential returns per unit of risk. The Hygon Information Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  13,670  in Hygon Information Technology on December 23, 2024 and sell it today you would earn a total of  910.00  from holding Hygon Information Technology or generate 6.66% return on investment over 90 days.

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

Gan Yuan Foods  vs.  Hygon Information Technology

Gan Yuan Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gan Yuan Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hygon Information

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Gan Yuan and Hygon Information

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

The idea behind Gan Yuan Foods and Hygon Information 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.