Correlation Between Gansu Jiu and Shaanxi Construction

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

Diversification Opportunities for Gansu Jiu and Shaanxi Construction

0.0

Correlation Coefficient

Gansu Jiu  Shaanxi Construction

Pay attention - limited upside

The 3 months correlation between Gansu and Shaanxi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Jiu Steel and Shaanxi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Construction 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 Shaanxi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Construction has no effect on the direction of Gansu Jiu i.e., Gansu Jiu and Shaanxi Construction go up and down completely randomly.

Pair Corralation between Gansu Jiu and Shaanxi Construction

If you would invest  140.00  in Gansu Jiu Steel on October 9, 2024 and sell it today you would earn a total of  10.00  from holding Gansu Jiu Steel or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Gansu Jiu Steel  vs.  Shaanxi Construction Machinery

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.

Shaanxi Construction

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Shaanxi Construction Machinery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shaanxi Construction 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 Shaanxi Construction

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

The idea behind Gansu Jiu Steel and Shaanxi Construction Machinery 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.