Correlation Between Anhui Jianghuai and CNPC Capital

Can any of the company-specific risk be diversified away by investing in both Anhui Jianghuai and CNPC Capital 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 Anhui Jianghuai and CNPC Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anhui Jianghuai Automobile and CNPC Capital Co, you can compare the effects of market volatilities on Anhui Jianghuai and CNPC Capital 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 Anhui Jianghuai with a short position of CNPC Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Jianghuai and CNPC Capital.

Diversification Opportunities for Anhui Jianghuai and CNPC Capital

0.48

Correlation Coefficient

Anhui Jianghuai  CNPC Capital

Very weak diversification

The 3 months correlation between Anhui and CNPC is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Jianghuai Automobile and CNPC Capital Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNPC Capital and Anhui Jianghuai 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 Anhui Jianghuai Automobile are associated (or correlated) with CNPC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNPC Capital has no effect on the direction of Anhui Jianghuai i.e., Anhui Jianghuai and CNPC Capital go up and down completely randomly.

Pair Corralation between Anhui Jianghuai and CNPC Capital

Assuming the 90 days trading horizon Anhui Jianghuai Automobile is expected to under-perform the CNPC Capital. In addition to that, Anhui Jianghuai is 1.63 times more volatile than CNPC Capital Co. It trades about -0.11 of its total potential returns per unit of risk. CNPC Capital Co is currently generating about -0.09 per unit of volatility. If you would invest  712.00  in CNPC Capital Co on December 24, 2024 and sell it today you would lose (65.00) from holding CNPC Capital Co or give up 9.13% of portfolio value over 90 days.

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

Anhui Jianghuai Automobile  vs.  CNPC Capital Co

Anhui Jianghuai Auto

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anhui Jianghuai Automobile 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.

CNPC Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNPC Capital Co 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.

Pair Trading with Anhui Jianghuai and CNPC Capital

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

The idea behind Anhui Jianghuai Automobile and CNPC Capital 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.