Correlation Between Anhui Gujing and Kweichow Moutai

Can any of the company-specific risk be diversified away by investing in both Anhui Gujing and Kweichow Moutai 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 Anhui Gujing and Kweichow Moutai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anhui Gujing Distillery and Kweichow Moutai Co, you can compare the effects of market volatilities on Anhui Gujing and Kweichow Moutai 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 Anhui Gujing with a short position of Kweichow Moutai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Gujing and Kweichow Moutai.

Diversification Opportunities for Anhui Gujing and Kweichow Moutai

0.93

Correlation Coefficient

Anhui Gujing  Kweichow Moutai

Almost no diversification

The 3 months correlation between Anhui and Kweichow is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Gujing Distillery and Kweichow Moutai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kweichow Moutai and Anhui Gujing 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 Anhui Gujing Distillery are associated (or correlated) with Kweichow Moutai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kweichow Moutai has no effect on the direction of Anhui Gujing i.e., Anhui Gujing and Kweichow Moutai go up and down completely randomly.

Pair Corralation between Anhui Gujing and Kweichow Moutai

Assuming the 90 days trading horizon Anhui Gujing is expected to generate 1.15 times less return on investment than Kweichow Moutai. In addition to that, Anhui Gujing is 1.02 times more volatile than Kweichow Moutai Co. It trades about 0.05 of its total potential returns per unit of risk. Kweichow Moutai Co is currently generating about 0.06 per unit of volatility. If you would invest  140,488  in Kweichow Moutai Co on September 5, 2024 and sell it today you would earn a total of  12,186  from holding Kweichow Moutai Co or generate 8.67% return on investment over 90 days.

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

Anhui Gujing Distillery  vs.  Kweichow Moutai Co

Anhui Gujing Distillery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Gujing Distillery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Gujing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kweichow Moutai

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kweichow Moutai Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kweichow Moutai may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Anhui Gujing and Kweichow Moutai

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

The idea behind Anhui Gujing Distillery and Kweichow Moutai 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 CEOs Directory module to screen CEOs from public companies around the world.