Correlation Between China Asset and Sanquan Food

Can any of the company-specific risk be diversified away by investing in both China Asset and Sanquan Food 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 China Asset and Sanquan Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Asset Management and Sanquan Food Co, you can compare the effects of market volatilities on China Asset and Sanquan Food 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 China Asset with a short position of Sanquan Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Asset and Sanquan Food.

Diversification Opportunities for China Asset and Sanquan Food

-0.8

Correlation Coefficient

China Asset  Sanquan Food

Pay attention - limited upside

The 3 months correlation between China and Sanquan is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding China Asset Management and Sanquan Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanquan Food and China Asset 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 China Asset Management are associated (or correlated) with Sanquan Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanquan Food has no effect on the direction of China Asset i.e., China Asset and Sanquan Food go up and down completely randomly.

Pair Corralation between China Asset and Sanquan Food

Assuming the 90 days trading horizon China Asset Management is expected to generate 0.94 times more return on investment than Sanquan Food. However, China Asset Management is 1.06 times less risky than Sanquan Food. It trades about 0.13 of its potential returns per unit of risk. Sanquan Food Co is currently generating about -0.16 per unit of risk. If you would invest  355.00  in China Asset Management on December 25, 2024 and sell it today you would earn a total of  32.00  from holding China Asset Management or generate 9.01% return on investment over 90 days.

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

China Asset Management  vs.  Sanquan Food Co

China Asset Management

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Asset Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Asset may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sanquan Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanquan Food Co 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 China Asset and Sanquan Food

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

The idea behind China Asset Management and Sanquan Food 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.