Correlation Between Gansu Jiu and Agricultural Bank

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

Diversification Opportunities for Gansu Jiu and Agricultural Bank

-0.4

Correlation Coefficient

Gansu Jiu  Agricultural Bank

Very good diversification

The 3 months correlation between Gansu and Agricultural is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Jiu Steel and Agricultural Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Gansu Jiu i.e., Gansu Jiu and Agricultural Bank go up and down completely randomly.

Pair Corralation between Gansu Jiu and Agricultural Bank

Assuming the 90 days trading horizon Gansu Jiu Steel is expected to under-perform the Agricultural Bank. In addition to that, Gansu Jiu is 1.45 times more volatile than Agricultural Bank of. It trades about -0.25 of its total potential returns per unit of risk. Agricultural Bank of is currently generating about -0.12 per unit of volatility. If you would invest  519.00  in Agricultural Bank of on October 23, 2024 and sell it today you would lose (18.00) from holding Agricultural Bank of or give up 3.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Gansu Jiu Steel  vs.  Agricultural Bank of

Gansu Jiu Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Jiu Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Agricultural Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agricultural Bank of are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Agricultural Bank 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 Agricultural Bank

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

The idea behind Gansu Jiu Steel and Agricultural Bank of 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 Transaction History module to view history of all your transactions and understand their impact on performance.