Correlation Between Guangxi Wuzhou and Anker Innovations

Can any of the company-specific risk be diversified away by investing in both Guangxi Wuzhou and Anker Innovations 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 Guangxi Wuzhou and Anker Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangxi Wuzhou Communications and Anker Innovations Technology, you can compare the effects of market volatilities on Guangxi Wuzhou and Anker Innovations 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 Guangxi Wuzhou with a short position of Anker Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangxi Wuzhou and Anker Innovations.

Diversification Opportunities for Guangxi Wuzhou and Anker Innovations

-0.6

Correlation Coefficient

Guangxi Wuzhou  Anker Innovations

Excellent diversification

The 3 months correlation between Guangxi and Anker is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Guangxi Wuzhou Communications and Anker Innovations Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anker Innovations and Guangxi Wuzhou 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 Guangxi Wuzhou Communications are associated (or correlated) with Anker Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anker Innovations has no effect on the direction of Guangxi Wuzhou i.e., Guangxi Wuzhou and Anker Innovations go up and down completely randomly.

Pair Corralation between Guangxi Wuzhou and Anker Innovations

Assuming the 90 days trading horizon Guangxi Wuzhou Communications is expected to under-perform the Anker Innovations. But the stock apears to be less risky and, when comparing its historical volatility, Guangxi Wuzhou Communications is 1.06 times less risky than Anker Innovations. The stock trades about -0.12 of its potential returns per unit of risk. The Anker Innovations Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,613  in Anker Innovations Technology on December 26, 2024 and sell it today you would earn a total of  531.00  from holding Anker Innovations Technology or generate 5.52% return on investment over 90 days.

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

Guangxi Wuzhou Communications  vs.  Anker Innovations Technology

Guangxi Wuzhou Commu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangxi Wuzhou Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Anker Innovations

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anker Innovations Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anker Innovations may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Guangxi Wuzhou and Anker Innovations

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

The idea behind Guangxi Wuzhou Communications and Anker Innovations 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.