Correlation Between Hwabao WP and SGSG Sciencetechnolog

Can any of the company-specific risk be diversified away by investing in both Hwabao WP and SGSG Sciencetechnolog 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 Hwabao WP and SGSG Sciencetechnolog into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hwabao WP CSI and SGSG Sciencetechnology Co, you can compare the effects of market volatilities on Hwabao WP and SGSG Sciencetechnolog 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 Hwabao WP with a short position of SGSG Sciencetechnolog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwabao WP and SGSG Sciencetechnolog.

Diversification Opportunities for Hwabao WP and SGSG Sciencetechnolog

-0.66

Correlation Coefficient

Hwabao WP  SGSG Sciencetechnolog

Excellent diversification

The 3 months correlation between Hwabao and SGSG is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hwabao WP CSI and SGSG Sciencetechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGSG Sciencetechnology and Hwabao WP 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 Hwabao WP CSI are associated (or correlated) with SGSG Sciencetechnolog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGSG Sciencetechnology has no effect on the direction of Hwabao WP i.e., Hwabao WP and SGSG Sciencetechnolog go up and down completely randomly.

Pair Corralation between Hwabao WP and SGSG Sciencetechnolog

Assuming the 90 days trading horizon Hwabao WP is expected to generate 29.7 times less return on investment than SGSG Sciencetechnolog. But when comparing it to its historical volatility, Hwabao WP CSI is 3.17 times less risky than SGSG Sciencetechnolog. It trades about 0.0 of its potential returns per unit of risk. SGSG Sciencetechnology Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,559  in SGSG Sciencetechnology Co on December 25, 2024 and sell it today you would lose (127.00) from holding SGSG Sciencetechnology Co or give up 2.79% of portfolio value over 90 days.

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

Hwabao WP CSI  vs.  SGSG Sciencetechnology Co

Hwabao WP CSI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hwabao WP CSI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hwabao WP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SGSG Sciencetechnology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SGSG Sciencetechnology Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SGSG Sciencetechnolog may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hwabao WP and SGSG Sciencetechnolog

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

The idea behind Hwabao WP CSI and SGSG Sciencetechnology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.