Correlation Between Gansu Jiu and HanS Laser

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

By analyzing existing cross correlation between Gansu Jiu Steel and HanS Laser Tech, you can compare the effects of market volatilities on Gansu Jiu and HanS Laser 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 Jiu with a short position of HanS Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gansu Jiu and HanS Laser.

Diversification Opportunities for Gansu Jiu and HanS Laser

0.81

Correlation Coefficient

Gansu Jiu  HanS Laser

Very poor diversification

The 3 months correlation between Gansu and HanS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Jiu Steel and HanS Laser Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HanS Laser Tech and Gansu Jiu 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 Jiu Steel are associated (or correlated) with HanS Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HanS Laser Tech has no effect on the direction of Gansu Jiu i.e., Gansu Jiu and HanS Laser go up and down completely randomly.

Pair Corralation between Gansu Jiu and HanS Laser

Assuming the 90 days trading horizon Gansu Jiu Steel is expected to under-perform the HanS Laser. In addition to that, Gansu Jiu is 1.34 times more volatile than HanS Laser Tech. It trades about -0.01 of its total potential returns per unit of risk. HanS Laser Tech is currently generating about 0.07 per unit of volatility. If you would invest  2,568  in HanS Laser Tech on September 28, 2024 and sell it today you would earn a total of  64.00  from holding HanS Laser Tech or generate 2.49% return on investment over 90 days.

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

Gansu Jiu Steel  vs.  HanS Laser Tech

Gansu Jiu Steel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Jiu Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gansu Jiu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HanS Laser Tech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HanS Laser Tech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HanS Laser sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gansu Jiu and HanS Laser

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

The idea behind Gansu Jiu Steel and HanS Laser Tech 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.