Correlation Between Chinese Gamer and WINSON Machinery

Can any of the company-specific risk be diversified away by investing in both Chinese Gamer and WINSON Machinery 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 Chinese Gamer and WINSON Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Chinese Gamer and WINSON Machinery

0.32

Correlation Coefficient

Chinese Gamer  WINSON Machinery

Weak diversification

The 3 months correlation between Chinese and WINSON is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Gamer International and WINSON Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINSON Machinery and Chinese Gamer 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 Chinese Gamer International are associated (or correlated) with WINSON Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINSON Machinery has no effect on the direction of Chinese Gamer i.e., Chinese Gamer and WINSON Machinery go up and down completely randomly.

Pair Corralation between Chinese Gamer and WINSON Machinery

Assuming the 90 days trading horizon Chinese Gamer International is expected to under-perform the WINSON Machinery. In addition to that, Chinese Gamer is 1.03 times more volatile than WINSON Machinery Co. It trades about 0.0 of its total potential returns per unit of risk. WINSON Machinery Co is currently generating about 0.02 per unit of volatility. If you would invest  1,798  in WINSON Machinery Co on October 2, 2024 and sell it today you would earn a total of  137.00  from holding WINSON Machinery Co or generate 7.62% return on investment over 90 days.

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

Chinese Gamer International  vs.  WINSON Machinery Co

Chinese Gamer Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chinese Gamer International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chinese Gamer is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

WINSON Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WINSON Machinery Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chinese Gamer and WINSON Machinery

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

The idea behind Chinese Gamer International and WINSON Machinery Co 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.