Correlation Between Gansu Yasheng and Beijing Jiaman

Can any of the company-specific risk be diversified away by investing in both Gansu Yasheng and Beijing Jiaman 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 Gansu Yasheng and Beijing Jiaman into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gansu Yasheng Industrial and Beijing Jiaman Dress, you can compare the effects of market volatilities on Gansu Yasheng and Beijing Jiaman 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 Gansu Yasheng with a short position of Beijing Jiaman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gansu Yasheng and Beijing Jiaman.

Diversification Opportunities for Gansu Yasheng and Beijing Jiaman

0.59

Correlation Coefficient

Gansu Yasheng  Beijing Jiaman

Very weak diversification

The 3 months correlation between Gansu and Beijing is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Yasheng Industrial and Beijing Jiaman Dress in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Jiaman Dress and Gansu Yasheng 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 Gansu Yasheng Industrial are associated (or correlated) with Beijing Jiaman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Jiaman Dress has no effect on the direction of Gansu Yasheng i.e., Gansu Yasheng and Beijing Jiaman go up and down completely randomly.

Pair Corralation between Gansu Yasheng and Beijing Jiaman

Assuming the 90 days trading horizon Gansu Yasheng Industrial is expected to generate 1.08 times more return on investment than Beijing Jiaman. However, Gansu Yasheng is 1.08 times more volatile than Beijing Jiaman Dress. It trades about 0.02 of its potential returns per unit of risk. Beijing Jiaman Dress is currently generating about -0.09 per unit of risk. If you would invest  291.00  in Gansu Yasheng Industrial on October 4, 2024 and sell it today you would earn a total of  2.00  from holding Gansu Yasheng Industrial or generate 0.69% return on investment over 90 days.

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

Gansu Yasheng Industrial  vs.  Beijing Jiaman Dress

Gansu Yasheng Industrial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Yasheng Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gansu Yasheng is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Beijing Jiaman Dress

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Jiaman Dress 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.

Pair Trading with Gansu Yasheng and Beijing Jiaman

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

The idea behind Gansu Yasheng Industrial and Beijing Jiaman Dress 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.