Correlation Between Puyang Huicheng and Zhengzhou Qianweiyangchu

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Puyang Huicheng and Zhengzhou Qianweiyangchu 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 Puyang Huicheng and Zhengzhou Qianweiyangchu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puyang Huicheng Electronic and Zhengzhou Qianweiyangchu Food, you can compare the effects of market volatilities on Puyang Huicheng and Zhengzhou Qianweiyangchu 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 Puyang Huicheng with a short position of Zhengzhou Qianweiyangchu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puyang Huicheng and Zhengzhou Qianweiyangchu.

Diversification Opportunities for Puyang Huicheng and Zhengzhou Qianweiyangchu

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Puyang and Zhengzhou is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Puyang Huicheng Electronic and Zhengzhou Qianweiyangchu Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengzhou Qianweiyangchu and Puyang Huicheng 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 Puyang Huicheng Electronic are associated (or correlated) with Zhengzhou Qianweiyangchu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengzhou Qianweiyangchu has no effect on the direction of Puyang Huicheng i.e., Puyang Huicheng and Zhengzhou Qianweiyangchu go up and down completely randomly.

Pair Corralation between Puyang Huicheng and Zhengzhou Qianweiyangchu

Assuming the 90 days trading horizon Puyang Huicheng is expected to generate 1.07 times less return on investment than Zhengzhou Qianweiyangchu. But when comparing it to its historical volatility, Puyang Huicheng Electronic is 1.18 times less risky than Zhengzhou Qianweiyangchu. It trades about 0.2 of its potential returns per unit of risk. Zhengzhou Qianweiyangchu Food is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,308  in Zhengzhou Qianweiyangchu Food on September 22, 2024 and sell it today you would earn a total of  1,129  from holding Zhengzhou Qianweiyangchu Food or generate 48.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Puyang Huicheng Electronic  vs.  Zhengzhou Qianweiyangchu Food

 Performance 
       Timeline  
Puyang Huicheng Elec 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Puyang Huicheng Electronic are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Puyang Huicheng sustained solid returns over the last few months and may actually be approaching a breakup point.
Zhengzhou Qianweiyangchu 

Risk-Adjusted Performance

13 of 100

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

Puyang Huicheng and Zhengzhou Qianweiyangchu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Puyang Huicheng and Zhengzhou Qianweiyangchu

The main advantage of trading using opposite Puyang Huicheng and Zhengzhou Qianweiyangchu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puyang Huicheng position performs unexpectedly, Zhengzhou Qianweiyangchu 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 Zhengzhou Qianweiyangchu will offset losses from the drop in Zhengzhou Qianweiyangchu's long position.
The idea behind Puyang Huicheng Electronic and Zhengzhou Qianweiyangchu Food 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.
Check out your portfolio center.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

Other Complementary Tools

Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Content Syndication
Quickly integrate customizable finance content to your own investment portal