Correlation Between Iat Automobile and Anhui Deli

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

By analyzing existing cross correlation between Iat Automobile Technology and Anhui Deli Household, you can compare the effects of market volatilities on Iat Automobile and Anhui Deli 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 Iat Automobile with a short position of Anhui Deli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iat Automobile and Anhui Deli.

Diversification Opportunities for Iat Automobile and Anhui Deli

0.74

Correlation Coefficient

Iat Automobile  Anhui Deli

Poor diversification

The 3 months correlation between Iat and Anhui is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and Anhui Deli Household in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Deli Household and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with Anhui Deli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Deli Household has no effect on the direction of Iat Automobile i.e., Iat Automobile and Anhui Deli go up and down completely randomly.

Pair Corralation between Iat Automobile and Anhui Deli

Assuming the 90 days trading horizon Iat Automobile Technology is expected to generate 1.22 times more return on investment than Anhui Deli. However, Iat Automobile is 1.22 times more volatile than Anhui Deli Household. It trades about 0.02 of its potential returns per unit of risk. Anhui Deli Household is currently generating about -0.02 per unit of risk. If you would invest  1,165  in Iat Automobile Technology on September 28, 2024 and sell it today you would lose (10.00) from holding Iat Automobile Technology or give up 0.86% of portfolio value over 90 days.

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

Iat Automobile Technology  vs.  Anhui Deli Household

Iat Automobile Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iat Automobile Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iat Automobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Anhui Deli Household

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Deli Household 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.

Pair Trading with Iat Automobile and Anhui Deli

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

The idea behind Iat Automobile Technology and Anhui Deli Household 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 Global Correlations module to find global opportunities by holding instruments from different markets.