Correlation Between Anhui Gujing and GalaxyCore

Can any of the company-specific risk be diversified away by investing in both Anhui Gujing and GalaxyCore 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 GalaxyCore 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 GalaxyCore, you can compare the effects of market volatilities on Anhui Gujing and GalaxyCore 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 GalaxyCore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Gujing and GalaxyCore.

Diversification Opportunities for Anhui Gujing and GalaxyCore

0.86

Correlation Coefficient

Anhui Gujing  GalaxyCore

Very poor diversification

The 3 months correlation between Anhui and GalaxyCore is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Gujing Distillery and GalaxyCore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GalaxyCore 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 GalaxyCore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GalaxyCore has no effect on the direction of Anhui Gujing i.e., Anhui Gujing and GalaxyCore go up and down completely randomly.

Pair Corralation between Anhui Gujing and GalaxyCore

Assuming the 90 days trading horizon Anhui Gujing Distillery is expected to generate 0.71 times more return on investment than GalaxyCore. However, Anhui Gujing Distillery is 1.42 times less risky than GalaxyCore. It trades about -0.11 of its potential returns per unit of risk. GalaxyCore is currently generating about -0.18 per unit of risk. If you would invest  11,722  in Anhui Gujing Distillery on September 21, 2024 and sell it today you would lose (525.00) from holding Anhui Gujing Distillery or give up 4.48% of portfolio value over 90 days.

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

Anhui Gujing Distillery  vs.  GalaxyCore

Anhui Gujing Distillery

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Gujing Distillery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Gujing sustained solid returns over the last few months and may actually be approaching a breakup point.

GalaxyCore

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GalaxyCore are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GalaxyCore sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Gujing and GalaxyCore

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

The idea behind Anhui Gujing Distillery and GalaxyCore 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.