Correlation Between Hangzhou Gisway and Hangzhou Huawang

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

Diversification Opportunities for Hangzhou Gisway and Hangzhou Huawang

HangzhouHangzhouDiversified AwayHangzhouHangzhouDiversified Away100%
0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Hangzhou and Hangzhou is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Gisway Information and Hangzhou Huawang New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Huawang New and Hangzhou Gisway 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 Hangzhou Gisway Information are associated (or correlated) with Hangzhou Huawang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Huawang New has no effect on the direction of Hangzhou Gisway i.e., Hangzhou Gisway and Hangzhou Huawang go up and down completely randomly.

Pair Corralation between Hangzhou Gisway and Hangzhou Huawang

Assuming the 90 days trading horizon Hangzhou Gisway Information is expected to generate 2.07 times more return on investment than Hangzhou Huawang. However, Hangzhou Gisway is 2.07 times more volatile than Hangzhou Huawang New. It trades about 0.01 of its potential returns per unit of risk. Hangzhou Huawang New is currently generating about -0.03 per unit of risk. If you would invest  3,029  in Hangzhou Gisway Information on October 16, 2024 and sell it today you would lose (72.00) from holding Hangzhou Gisway Information or give up 2.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Hangzhou Gisway Information  vs.  Hangzhou Huawang New

 Performance 
JavaScript chart by amCharts 3.21.15NovDec -10010203040
JavaScript chart by amCharts 3.21.15301390 605377
       Timeline  
Hangzhou Gisway Info 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hangzhou Gisway Information has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hangzhou Gisway is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan30323436384042
Hangzhou Huawang New 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hangzhou Huawang New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hangzhou Huawang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1212.51313.514

Hangzhou Gisway and Hangzhou Huawang Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.78-9.57-6.36-3.160.03.136.379.6212.8616.1 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15301390 605377
       Returns  

Pair Trading with Hangzhou Gisway and Hangzhou Huawang

The main advantage of trading using opposite Hangzhou Gisway and Hangzhou Huawang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hangzhou Gisway position performs unexpectedly, Hangzhou Huawang 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 Hangzhou Huawang will offset losses from the drop in Hangzhou Huawang's long position.
The idea behind Hangzhou Gisway Information and Hangzhou Huawang New 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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