Correlation Between Hengerda New and AUPU Home

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

By analyzing existing cross correlation between Hengerda New Materials and AUPU Home Style, you can compare the effects of market volatilities on Hengerda New and AUPU Home 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 Hengerda New with a short position of AUPU Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengerda New and AUPU Home.

Diversification Opportunities for Hengerda New and AUPU Home

0.64

Correlation Coefficient

Hengerda New  AUPU Home

Poor diversification

The 3 months correlation between Hengerda and AUPU is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hengerda New Materials and AUPU Home Style in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUPU Home Style and Hengerda New 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 Hengerda New Materials are associated (or correlated) with AUPU Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUPU Home Style has no effect on the direction of Hengerda New i.e., Hengerda New and AUPU Home go up and down completely randomly.

Pair Corralation between Hengerda New and AUPU Home

Assuming the 90 days trading horizon Hengerda New Materials is expected to under-perform the AUPU Home. In addition to that, Hengerda New is 1.28 times more volatile than AUPU Home Style. It trades about -0.04 of its total potential returns per unit of risk. AUPU Home Style is currently generating about 0.04 per unit of volatility. If you would invest  1,033  in AUPU Home Style on October 10, 2024 and sell it today you would earn a total of  46.00  from holding AUPU Home Style or generate 4.45% return on investment over 90 days.

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

Hengerda New Materials  vs.  AUPU Home Style

Hengerda New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hengerda New Materials 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.

AUPU Home Style

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AUPU Home Style are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AUPU Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hengerda New and AUPU Home

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

The idea behind Hengerda New Materials and AUPU Home Style 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.