Correlation Between Weihai Honglin and SSAW Hotels

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

Diversification Opportunities for Weihai Honglin and SSAW Hotels

WeihaiSSAWDiversified AwayWeihaiSSAWDiversified Away100%
-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between Weihai and SSAW is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Weihai Honglin Electronic and SSAW Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAW Hotels Resorts and Weihai Honglin 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 Weihai Honglin Electronic are associated (or correlated) with SSAW Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSAW Hotels Resorts has no effect on the direction of Weihai Honglin i.e., Weihai Honglin and SSAW Hotels go up and down completely randomly.

Pair Corralation between Weihai Honglin and SSAW Hotels

Assuming the 90 days trading horizon Weihai Honglin Electronic is expected to generate 0.83 times more return on investment than SSAW Hotels. However, Weihai Honglin Electronic is 1.21 times less risky than SSAW Hotels. It trades about 0.12 of its potential returns per unit of risk. SSAW Hotels Resorts is currently generating about -0.08 per unit of risk. If you would invest  1,291  in Weihai Honglin Electronic on October 20, 2024 and sell it today you would earn a total of  270.00  from holding Weihai Honglin Electronic or generate 20.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.46%
ValuesDaily Returns

Weihai Honglin Electronic  vs.  SSAW Hotels Resorts

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -20-1001020
JavaScript chart by amCharts 3.21.15301439 301073
       Timeline  
Weihai Honglin Electronic 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Weihai Honglin Electronic are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Weihai Honglin sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1313.51414.51515.516
SSAW Hotels Resorts 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SSAW Hotels Resorts 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan182022242628

Weihai Honglin and SSAW Hotels Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.01-6.75-4.49-2.220.03772.364.767.159.55 0.0200.0250.0300.0350.0400.045
JavaScript chart by amCharts 3.21.15301439 301073
       Returns  

Pair Trading with Weihai Honglin and SSAW Hotels

The main advantage of trading using opposite Weihai Honglin and SSAW Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weihai Honglin position performs unexpectedly, SSAW Hotels 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 SSAW Hotels will offset losses from the drop in SSAW Hotels' long position.
The idea behind Weihai Honglin Electronic and SSAW Hotels Resorts 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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