Correlation Between Guangzhou Ruoyuchen and Hunan Airbluer

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

By analyzing existing cross correlation between Guangzhou Ruoyuchen Information and Hunan Airbluer Environmental, you can compare the effects of market volatilities on Guangzhou Ruoyuchen and Hunan Airbluer 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 Ruoyuchen with a short position of Hunan Airbluer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Ruoyuchen and Hunan Airbluer.

Diversification Opportunities for Guangzhou Ruoyuchen and Hunan Airbluer

-0.23

Correlation Coefficient

Guangzhou Ruoyuchen  Hunan Airbluer

Very good diversification

The 3 months correlation between Guangzhou and Hunan is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Ruoyuchen Informatio and Hunan Airbluer Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Airbluer Envir and Guangzhou Ruoyuchen 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 Ruoyuchen Information are associated (or correlated) with Hunan Airbluer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Airbluer Envir has no effect on the direction of Guangzhou Ruoyuchen i.e., Guangzhou Ruoyuchen and Hunan Airbluer go up and down completely randomly.

Pair Corralation between Guangzhou Ruoyuchen and Hunan Airbluer

Assuming the 90 days trading horizon Guangzhou Ruoyuchen Information is expected to generate 1.51 times more return on investment than Hunan Airbluer. However, Guangzhou Ruoyuchen is 1.51 times more volatile than Hunan Airbluer Environmental. It trades about 0.15 of its potential returns per unit of risk. Hunan Airbluer Environmental is currently generating about -0.08 per unit of risk. If you would invest  2,889  in Guangzhou Ruoyuchen Information on December 25, 2024 and sell it today you would earn a total of  1,124  from holding Guangzhou Ruoyuchen Information or generate 38.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Guangzhou Ruoyuchen Informatio  vs.  Hunan Airbluer Environmental

Guangzhou Ruoyuchen

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Ruoyuchen Information are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Ruoyuchen sustained solid returns over the last few months and may actually be approaching a breakup point.

Hunan Airbluer Envir

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hunan Airbluer Environmental 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.

Pair Trading with Guangzhou Ruoyuchen and Hunan Airbluer

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

The idea behind Guangzhou Ruoyuchen Information and Hunan Airbluer Environmental 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.