Correlation Between Wintao Communications and AVIC Heavy

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

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

Diversification Opportunities for Wintao Communications and AVIC Heavy

-0.46

Correlation Coefficient

Wintao Communications  AVIC Heavy

Very good diversification

The 3 months correlation between Wintao and AVIC is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wintao Communications Co and AVIC Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVIC Heavy Machinery and Wintao Communications 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 Wintao Communications Co are associated (or correlated) with AVIC Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVIC Heavy Machinery has no effect on the direction of Wintao Communications i.e., Wintao Communications and AVIC Heavy go up and down completely randomly.

Pair Corralation between Wintao Communications and AVIC Heavy

Assuming the 90 days trading horizon Wintao Communications Co is expected to generate 3.51 times more return on investment than AVIC Heavy. However, Wintao Communications is 3.51 times more volatile than AVIC Heavy Machinery. It trades about 0.11 of its potential returns per unit of risk. AVIC Heavy Machinery is currently generating about -0.14 per unit of risk. If you would invest  2,346  in Wintao Communications Co on December 29, 2024 and sell it today you would earn a total of  805.00  from holding Wintao Communications Co or generate 34.31% return on investment over 90 days.

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

Wintao Communications Co  vs.  AVIC Heavy Machinery

Wintao Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wintao Communications Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wintao Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

AVIC Heavy Machinery

Risk-Adjusted Performance

Very Weak

Over the last 90 days AVIC Heavy Machinery 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 Wintao Communications and AVIC Heavy

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

The idea behind Wintao Communications Co and AVIC Heavy Machinery 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.