Correlation Between Gemdale Corp and Sichuan Yahua

Can any of the company-specific risk be diversified away by investing in both Gemdale Corp and Sichuan Yahua 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 Gemdale Corp and Sichuan Yahua into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gemdale Corp and Sichuan Yahua Industrial, you can compare the effects of market volatilities on Gemdale Corp and Sichuan Yahua 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 Gemdale Corp with a short position of Sichuan Yahua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemdale Corp and Sichuan Yahua.

Diversification Opportunities for Gemdale Corp and Sichuan Yahua

-0.23

Correlation Coefficient

Gemdale Corp  Sichuan Yahua

Very good diversification

The 3 months correlation between Gemdale and Sichuan is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gemdale Corp and Sichuan Yahua Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Yahua Industrial and Gemdale Corp 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 Gemdale Corp are associated (or correlated) with Sichuan Yahua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Yahua Industrial has no effect on the direction of Gemdale Corp i.e., Gemdale Corp and Sichuan Yahua go up and down completely randomly.

Pair Corralation between Gemdale Corp and Sichuan Yahua

Assuming the 90 days trading horizon Gemdale Corp is expected to generate 1.26 times more return on investment than Sichuan Yahua. However, Gemdale Corp is 1.26 times more volatile than Sichuan Yahua Industrial. It trades about -0.04 of its potential returns per unit of risk. Sichuan Yahua Industrial is currently generating about -0.05 per unit of risk. If you would invest  986.00  in Gemdale Corp on October 10, 2024 and sell it today you would lose (544.00) from holding Gemdale Corp or give up 55.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Gemdale Corp  vs.  Sichuan Yahua Industrial

Gemdale Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gemdale Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sichuan Yahua Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Yahua Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sichuan Yahua sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gemdale Corp and Sichuan Yahua

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

The idea behind Gemdale Corp and Sichuan Yahua Industrial 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.