Correlation Between Contemporary Amperex and AVIC UAS

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

By analyzing existing cross correlation between Contemporary Amperex Technology and AVIC UAS Co, you can compare the effects of market volatilities on Contemporary Amperex and AVIC UAS 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 Contemporary Amperex with a short position of AVIC UAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contemporary Amperex and AVIC UAS.

Diversification Opportunities for Contemporary Amperex and AVIC UAS

0.63

Correlation Coefficient

Contemporary Amperex  AVIC UAS

Poor diversification

The 3 months correlation between Contemporary and AVIC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Contemporary Amperex Technolog and AVIC UAS Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVIC UAS and Contemporary Amperex 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 Contemporary Amperex Technology are associated (or correlated) with AVIC UAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVIC UAS has no effect on the direction of Contemporary Amperex i.e., Contemporary Amperex and AVIC UAS go up and down completely randomly.

Pair Corralation between Contemporary Amperex and AVIC UAS

Assuming the 90 days trading horizon Contemporary Amperex Technology is expected to under-perform the AVIC UAS. But the stock apears to be less risky and, when comparing its historical volatility, Contemporary Amperex Technology is 1.62 times less risky than AVIC UAS. The stock trades about -0.05 of its potential returns per unit of risk. The AVIC UAS Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,478  in AVIC UAS Co on October 1, 2024 and sell it today you would lose (153.00) from holding AVIC UAS Co or give up 3.42% of portfolio value over 90 days.

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

Contemporary Amperex Technolog  vs.  AVIC UAS Co

Contemporary Amperex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contemporary Amperex Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AVIC UAS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC UAS Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AVIC UAS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Contemporary Amperex and AVIC UAS

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

The idea behind Contemporary Amperex Technology and AVIC UAS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.