Correlation Between Yili Chuanning and Hubei Geoway

Can any of the company-specific risk be diversified away by investing in both Yili Chuanning and Hubei Geoway 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 Yili Chuanning and Hubei Geoway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yili Chuanning Biotechnology and Hubei Geoway Investment, you can compare the effects of market volatilities on Yili Chuanning and Hubei Geoway 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 Yili Chuanning with a short position of Hubei Geoway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yili Chuanning and Hubei Geoway.

Diversification Opportunities for Yili Chuanning and Hubei Geoway

0.02

Correlation Coefficient

Yili Chuanning  Hubei Geoway

Significant diversification

The 3 months correlation between Yili and Hubei is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Yili Chuanning Biotechnology and Hubei Geoway Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Geoway Investment and Yili Chuanning 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 Yili Chuanning Biotechnology are associated (or correlated) with Hubei Geoway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Geoway Investment has no effect on the direction of Yili Chuanning i.e., Yili Chuanning and Hubei Geoway go up and down completely randomly.

Pair Corralation between Yili Chuanning and Hubei Geoway

Assuming the 90 days trading horizon Yili Chuanning Biotechnology is expected to generate 0.79 times more return on investment than Hubei Geoway. However, Yili Chuanning Biotechnology is 1.26 times less risky than Hubei Geoway. It trades about 0.02 of its potential returns per unit of risk. Hubei Geoway Investment is currently generating about -0.08 per unit of risk. If you would invest  1,242  in Yili Chuanning Biotechnology on December 24, 2024 and sell it today you would earn a total of  20.00  from holding Yili Chuanning Biotechnology or generate 1.61% return on investment over 90 days.

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

Yili Chuanning Biotechnology  vs.  Hubei Geoway Investment

Yili Chuanning Biote

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yili Chuanning Biotechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Yili Chuanning is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hubei Geoway Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hubei Geoway Investment 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 Yili Chuanning and Hubei Geoway

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

The idea behind Yili Chuanning Biotechnology and Hubei Geoway Investment 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.