Correlation Between Hainan Poly and Industrial

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

By analyzing existing cross correlation between Hainan Poly Pharm and Industrial and Commercial, you can compare the effects of market volatilities on Hainan Poly and Industrial 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 Hainan Poly with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Poly and Industrial.

Diversification Opportunities for Hainan Poly and Industrial

-0.33

Correlation Coefficient

Hainan Poly  Industrial

Very good diversification

The 3 months correlation between Hainan and Industrial is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Poly Pharm and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Hainan Poly 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 Hainan Poly Pharm are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Hainan Poly i.e., Hainan Poly and Industrial go up and down completely randomly.

Pair Corralation between Hainan Poly and Industrial

Assuming the 90 days trading horizon Hainan Poly Pharm is expected to under-perform the Industrial. In addition to that, Hainan Poly is 7.42 times more volatile than Industrial and Commercial. It trades about -0.17 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about -0.01 per unit of volatility. If you would invest  692.00  in Industrial and Commercial on December 27, 2024 and sell it today you would lose (9.00) from holding Industrial and Commercial or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Hainan Poly Pharm  vs.  Industrial and Commercial

Hainan Poly Pharm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hainan Poly Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Industrial and Commercial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Hainan Poly and Industrial

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

The idea behind Hainan Poly Pharm and Industrial and Commercial 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.