Correlation Between Puyang Huicheng and Inner Mongolia

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Puyang Huicheng and Inner Mongolia 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 Inner Mongolia 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 Inner Mongolia BaoTou, you can compare the effects of market volatilities on Puyang Huicheng and Inner Mongolia 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 Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puyang Huicheng and Inner Mongolia.

Diversification Opportunities for Puyang Huicheng and Inner Mongolia

0.86
  Correlation Coefficient

Very poor diversification

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

Pair Corralation between Puyang Huicheng and Inner Mongolia

Assuming the 90 days trading horizon Puyang Huicheng is expected to generate 1.01 times less return on investment than Inner Mongolia. In addition to that, Puyang Huicheng is 1.1 times more volatile than Inner Mongolia BaoTou. It trades about 0.15 of its total potential returns per unit of risk. Inner Mongolia BaoTou is currently generating about 0.17 per unit of volatility. If you would invest  142.00  in Inner Mongolia BaoTou on September 1, 2024 and sell it today you would earn a total of  50.00  from holding Inner Mongolia BaoTou or generate 35.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Puyang Huicheng Electronic  vs.  Inner Mongolia BaoTou

 Performance 
       Timeline  
Puyang Huicheng Elec 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Puyang Huicheng Electronic are ranked lower than 11 (%) 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.
Inner Mongolia BaoTou 

Risk-Adjusted Performance

13 of 100

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

Puyang Huicheng and Inner Mongolia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Puyang Huicheng and Inner Mongolia

The main advantage of trading using opposite Puyang Huicheng and Inner Mongolia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puyang Huicheng position performs unexpectedly, Inner Mongolia 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 Inner Mongolia will offset losses from the drop in Inner Mongolia's long position.
The idea behind Puyang Huicheng Electronic and Inner Mongolia BaoTou 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

Other Complementary Tools

Bonds Directory
Find actively traded corporate debentures issued by US companies
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges