Correlation Between CIMC Vehicles and Anhui Jianghuai

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

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

Diversification Opportunities for CIMC Vehicles and Anhui Jianghuai

0.45

Correlation Coefficient

CIMC Vehicles  Anhui Jianghuai

Very weak diversification

The 3 months correlation between CIMC and Anhui is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CIMC Vehicles Co and Anhui Jianghuai Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Jianghuai Auto and CIMC Vehicles 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 CIMC Vehicles Co are associated (or correlated) with Anhui Jianghuai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Jianghuai Auto has no effect on the direction of CIMC Vehicles i.e., CIMC Vehicles and Anhui Jianghuai go up and down completely randomly.

Pair Corralation between CIMC Vehicles and Anhui Jianghuai

Assuming the 90 days trading horizon CIMC Vehicles Co is expected to generate 0.43 times more return on investment than Anhui Jianghuai. However, CIMC Vehicles Co is 2.35 times less risky than Anhui Jianghuai. It trades about -0.09 of its potential returns per unit of risk. Anhui Jianghuai Automobile is currently generating about -0.11 per unit of risk. If you would invest  953.00  in CIMC Vehicles Co on December 24, 2024 and sell it today you would lose (60.00) from holding CIMC Vehicles Co or give up 6.3% of portfolio value over 90 days.

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

CIMC Vehicles Co  vs.  Anhui Jianghuai Automobile

CIMC Vehicles

Risk-Adjusted Performance

Very Weak

Over the last 90 days CIMC Vehicles Co 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.

Anhui Jianghuai Auto

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anhui Jianghuai Automobile 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.

Pair Trading with CIMC Vehicles and Anhui Jianghuai

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

The idea behind CIMC Vehicles Co and Anhui Jianghuai Automobile 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.