Correlation Between ShuYu Civilian and Hainan Mining

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Can any of the company-specific risk be diversified away by investing in both ShuYu Civilian and Hainan Mining 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 ShuYu Civilian and Hainan Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ShuYu Civilian Pharmacy and Hainan Mining Co, you can compare the effects of market volatilities on ShuYu Civilian and Hainan Mining 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 ShuYu Civilian with a short position of Hainan Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShuYu Civilian and Hainan Mining.

Diversification Opportunities for ShuYu Civilian and Hainan Mining

0.64
  Correlation Coefficient

Poor diversification

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

Pair Corralation between ShuYu Civilian and Hainan Mining

Assuming the 90 days trading horizon ShuYu Civilian Pharmacy is expected to generate 1.77 times more return on investment than Hainan Mining. However, ShuYu Civilian is 1.77 times more volatile than Hainan Mining Co. It trades about 0.0 of its potential returns per unit of risk. Hainan Mining Co is currently generating about 0.01 per unit of risk. If you would invest  1,208  in ShuYu Civilian Pharmacy on October 24, 2024 and sell it today you would lose (54.00) from holding ShuYu Civilian Pharmacy or give up 4.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.44%
ValuesDaily Returns

ShuYu Civilian Pharmacy  vs.  Hainan Mining Co

 Performance 
       Timeline  
ShuYu Civilian Pharmacy 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

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

ShuYu Civilian and Hainan Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ShuYu Civilian and Hainan Mining

The main advantage of trading using opposite ShuYu Civilian and Hainan Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShuYu Civilian position performs unexpectedly, Hainan Mining 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 Hainan Mining will offset losses from the drop in Hainan Mining's long position.
The idea behind ShuYu Civilian Pharmacy and Hainan Mining 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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