Correlation Between Anhui Jianghuai and Malion New

Can any of the company-specific risk be diversified away by investing in both Anhui Jianghuai and Malion New 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 Malion New 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 Malion New Materials, you can compare the effects of market volatilities on Anhui Jianghuai and Malion New 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 Malion New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Jianghuai and Malion New.

Diversification Opportunities for Anhui Jianghuai and Malion New

-0.03

Correlation Coefficient

Anhui Jianghuai  Malion New

Good diversification

The 3 months correlation between Anhui and Malion is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Jianghuai Automobile and Malion New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malion New Materials 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 Malion New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malion New Materials has no effect on the direction of Anhui Jianghuai i.e., Anhui Jianghuai and Malion New go up and down completely randomly.

Pair Corralation between Anhui Jianghuai and Malion New

Assuming the 90 days trading horizon Anhui Jianghuai Automobile is expected to under-perform the Malion New. In addition to that, Anhui Jianghuai is 1.15 times more volatile than Malion New Materials. It trades about -0.09 of its total potential returns per unit of risk. Malion New Materials is currently generating about 0.1 per unit of volatility. If you would invest  831.00  in Malion New Materials on December 25, 2024 and sell it today you would earn a total of  108.00  from holding Malion New Materials or generate 13.0% return on investment over 90 days.

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

Anhui Jianghuai Automobile  vs.  Malion New Materials

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.

Malion New Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Malion New Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malion New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Jianghuai and Malion New

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

The idea behind Anhui Jianghuai Automobile and Malion New 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.