Correlation Between Alton Sports and Chinyang Hold

Can any of the company-specific risk be diversified away by investing in both Alton Sports and Chinyang Hold 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 Alton Sports and Chinyang Hold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alton Sports CoLtd and Chinyang Hold, you can compare the effects of market volatilities on Alton Sports and Chinyang Hold 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 Alton Sports with a short position of Chinyang Hold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and Chinyang Hold.

Diversification Opportunities for Alton Sports and Chinyang Hold

0.16

Correlation Coefficient

Alton Sports  Chinyang Hold

Average diversification

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

Pair Corralation between Alton Sports and Chinyang Hold

Assuming the 90 days trading horizon Alton Sports CoLtd is expected to under-perform the Chinyang Hold. In addition to that, Alton Sports is 1.99 times more volatile than Chinyang Hold. It trades about -0.09 of its total potential returns per unit of risk. Chinyang Hold is currently generating about -0.05 per unit of volatility. If you would invest  317,500  in Chinyang Hold on October 8, 2024 and sell it today you would lose (9,000) from holding Chinyang Hold or give up 2.83% of portfolio value over 90 days.

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

Alton Sports CoLtd  vs.  Chinyang Hold

Alton Sports CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alton Sports CoLtd 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.

Chinyang Hold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alton Sports and Chinyang Hold

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

The idea behind Alton Sports CoLtd and Chinyang Hold 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.