Correlation Between Gansu Jiu and Andon Health

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

Diversification Opportunities for Gansu Jiu and Andon Health

0.51

Correlation Coefficient

Gansu Jiu  Andon Health

Very weak diversification

The 3 months correlation between Gansu and Andon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Jiu Steel and Andon Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andon Health 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 Andon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andon Health has no effect on the direction of Gansu Jiu i.e., Gansu Jiu and Andon Health go up and down completely randomly.

Pair Corralation between Gansu Jiu and Andon Health

Assuming the 90 days trading horizon Gansu Jiu Steel is expected to generate 0.92 times more return on investment than Andon Health. However, Gansu Jiu Steel is 1.09 times less risky than Andon Health. It trades about 0.0 of its potential returns per unit of risk. Andon Health Co is currently generating about -0.02 per unit of risk. If you would invest  164.00  in Gansu Jiu Steel on October 9, 2024 and sell it today you would lose (14.00) from holding Gansu Jiu Steel or give up 8.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Gansu Jiu Steel  vs.  Andon Health Co

Gansu Jiu Steel

Risk-Adjusted Performance

3 of 100

Very Weak

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 February 2025.

Andon Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gansu Jiu and Andon Health

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

The idea behind Gansu Jiu Steel and Andon Health 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.