Correlation Between Wuhan Yangtze and Anhui Estone

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Wuhan Yangtze and Anhui Estone 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 Wuhan Yangtze and Anhui Estone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wuhan Yangtze Communication and Anhui Estone Materials, you can compare the effects of market volatilities on Wuhan Yangtze and Anhui Estone 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 Wuhan Yangtze with a short position of Anhui Estone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Anhui Estone.

Diversification Opportunities for Wuhan Yangtze and Anhui Estone

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Wuhan and Anhui is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Anhui Estone Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Estone Materials and Wuhan Yangtze 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 Wuhan Yangtze Communication are associated (or correlated) with Anhui Estone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Estone Materials has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Anhui Estone go up and down completely randomly.

Pair Corralation between Wuhan Yangtze and Anhui Estone

Assuming the 90 days trading horizon Wuhan Yangtze Communication is expected to generate 0.99 times more return on investment than Anhui Estone. However, Wuhan Yangtze Communication is 1.01 times less risky than Anhui Estone. It trades about 0.04 of its potential returns per unit of risk. Anhui Estone Materials is currently generating about -0.01 per unit of risk. If you would invest  1,986  in Wuhan Yangtze Communication on October 8, 2024 and sell it today you would earn a total of  117.00  from holding Wuhan Yangtze Communication or generate 5.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Wuhan Yangtze Communication  vs.  Anhui Estone Materials

 Performance 
       Timeline  
Wuhan Yangtze Commun 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Wuhan Yangtze Communication are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wuhan Yangtze sustained solid returns over the last few months and may actually be approaching a breakup point.
Anhui Estone Materials 

Risk-Adjusted Performance

0 of 100

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

Wuhan Yangtze and Anhui Estone Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wuhan Yangtze and Anhui Estone

The main advantage of trading using opposite Wuhan Yangtze and Anhui Estone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Anhui Estone 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 Anhui Estone will offset losses from the drop in Anhui Estone's long position.
The idea behind Wuhan Yangtze Communication and Anhui Estone Materials 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 Stocks Directory module to find actively traded stocks across global markets.

Other Complementary Tools

Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Bonds Directory
Find actively traded corporate debentures issued by US companies