Correlation Between Gansu Yasheng and Hangzhou EZVIZ

Can any of the company-specific risk be diversified away by investing in both Gansu Yasheng and Hangzhou EZVIZ 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 Hangzhou EZVIZ 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 Hangzhou EZVIZ Network, you can compare the effects of market volatilities on Gansu Yasheng and Hangzhou EZVIZ 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 Hangzhou EZVIZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gansu Yasheng and Hangzhou EZVIZ.

Diversification Opportunities for Gansu Yasheng and Hangzhou EZVIZ

0.39

Correlation Coefficient

Gansu Yasheng  Hangzhou EZVIZ

Weak diversification

The 3 months correlation between Gansu and Hangzhou is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Yasheng Industrial and Hangzhou EZVIZ Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou EZVIZ Network 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 Hangzhou EZVIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou EZVIZ Network has no effect on the direction of Gansu Yasheng i.e., Gansu Yasheng and Hangzhou EZVIZ go up and down completely randomly.

Pair Corralation between Gansu Yasheng and Hangzhou EZVIZ

Assuming the 90 days trading horizon Gansu Yasheng Industrial is expected to generate 0.7 times more return on investment than Hangzhou EZVIZ. However, Gansu Yasheng Industrial is 1.42 times less risky than Hangzhou EZVIZ. It trades about 0.09 of its potential returns per unit of risk. Hangzhou EZVIZ Network is currently generating about -0.01 per unit of risk. If you would invest  247.00  in Gansu Yasheng Industrial on September 30, 2024 and sell it today you would earn a total of  56.00  from holding Gansu Yasheng Industrial or generate 22.67% return on investment over 90 days.

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

Gansu Yasheng Industrial  vs.  Hangzhou EZVIZ Network

Gansu Yasheng Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Yasheng Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gansu Yasheng may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hangzhou EZVIZ Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hangzhou EZVIZ Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Gansu Yasheng and Hangzhou EZVIZ

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

The idea behind Gansu Yasheng Industrial and Hangzhou EZVIZ Network 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.