Correlation Between Gansu Jiu and Amlogic Shanghai Co

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

Diversification Opportunities for Gansu Jiu and Amlogic Shanghai Co

-0.37

Correlation Coefficient

Gansu Jiu  Amlogic Shanghai Co

Very good diversification

The 3 months correlation between Gansu and Amlogic is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Jiu Steel and Amlogic Shanghai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amlogic Shanghai Co 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 Amlogic Shanghai Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amlogic Shanghai Co has no effect on the direction of Gansu Jiu i.e., Gansu Jiu and Amlogic Shanghai Co go up and down completely randomly.

Pair Corralation between Gansu Jiu and Amlogic Shanghai Co

Assuming the 90 days trading horizon Gansu Jiu Steel is expected to under-perform the Amlogic Shanghai Co. But the stock apears to be less risky and, when comparing its historical volatility, Gansu Jiu Steel is 2.02 times less risky than Amlogic Shanghai Co. The stock trades about -0.03 of its potential returns per unit of risk. The Amlogic Shanghai Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,406  in Amlogic Shanghai Co on December 25, 2024 and sell it today you would earn a total of  869.00  from holding Amlogic Shanghai Co or generate 11.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Gansu Jiu Steel  vs.  Amlogic Shanghai Co

Gansu Jiu Steel

Risk-Adjusted Performance

Very 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.

Amlogic Shanghai Co

Risk-Adjusted Performance

Modest

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

Pair Trading with Gansu Jiu and Amlogic Shanghai Co

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

The idea behind Gansu Jiu Steel and Amlogic Shanghai 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.