Correlation Between Gansu Jiu and Saurer Intelligent

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

Diversification Opportunities for Gansu Jiu and Saurer Intelligent

0.26

Correlation Coefficient

Gansu Jiu  Saurer Intelligent

Modest diversification

The 3 months correlation between Gansu and Saurer is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Jiu Steel and Saurer Intelligent Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saurer Intelligent 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 Saurer Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saurer Intelligent has no effect on the direction of Gansu Jiu i.e., Gansu Jiu and Saurer Intelligent go up and down completely randomly.

Pair Corralation between Gansu Jiu and Saurer Intelligent

Assuming the 90 days trading horizon Gansu Jiu Steel is expected to under-perform the Saurer Intelligent. But the stock apears to be less risky and, when comparing its historical volatility, Gansu Jiu Steel is 2.8 times less risky than Saurer Intelligent. The stock trades about -0.28 of its potential returns per unit of risk. The Saurer Intelligent Technology is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  284.00  in Saurer Intelligent Technology on October 24, 2024 and sell it today you would lose (24.00) from holding Saurer Intelligent Technology or give up 8.45% of portfolio value over 90 days.

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

Gansu Jiu Steel  vs.  Saurer Intelligent Technology

Gansu Jiu Steel

Risk-Adjusted Performance

0 of 100

Weak

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

Saurer Intelligent

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saurer Intelligent Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Saurer Intelligent sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gansu Jiu and Saurer Intelligent

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

The idea behind Gansu Jiu Steel and Saurer Intelligent Technology 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.