Correlation Between Hubei Geoway and Jiangsu Phoenix

Can any of the company-specific risk be diversified away by investing in both Hubei Geoway and Jiangsu Phoenix 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 Hubei Geoway and Jiangsu Phoenix into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hubei Geoway Investment and Jiangsu Phoenix Publishing, you can compare the effects of market volatilities on Hubei Geoway and Jiangsu Phoenix 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 Hubei Geoway with a short position of Jiangsu Phoenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Geoway and Jiangsu Phoenix.

Diversification Opportunities for Hubei Geoway and Jiangsu Phoenix

0.23

Correlation Coefficient

Hubei Geoway  Jiangsu Phoenix

Modest diversification

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

Pair Corralation between Hubei Geoway and Jiangsu Phoenix

Assuming the 90 days trading horizon Hubei Geoway Investment is expected to under-perform the Jiangsu Phoenix. In addition to that, Hubei Geoway is 2.27 times more volatile than Jiangsu Phoenix Publishing. It trades about -0.23 of its total potential returns per unit of risk. Jiangsu Phoenix Publishing is currently generating about -0.14 per unit of volatility. If you would invest  1,112  in Jiangsu Phoenix Publishing on October 13, 2024 and sell it today you would lose (62.00) from holding Jiangsu Phoenix Publishing or give up 5.58% of portfolio value over 90 days.

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

Hubei Geoway Investment  vs.  Jiangsu Phoenix Publishing

Hubei Geoway Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Geoway Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Geoway sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiangsu Phoenix Publ

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hubei Geoway and Jiangsu Phoenix

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

The idea behind Hubei Geoway Investment and Jiangsu Phoenix Publishing 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.