Correlation Between Long Yuan and Heilongjiang Publishing

Can any of the company-specific risk be diversified away by investing in both Long Yuan and Heilongjiang Publishing 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 Long Yuan and Heilongjiang Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Long Yuan Construction and Heilongjiang Publishing Media, you can compare the effects of market volatilities on Long Yuan and Heilongjiang Publishing 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 Long Yuan with a short position of Heilongjiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Yuan and Heilongjiang Publishing.

Diversification Opportunities for Long Yuan and Heilongjiang Publishing

0.8

Correlation Coefficient

Long Yuan  Heilongjiang Publishing

Very poor diversification

The 3 months correlation between Long and Heilongjiang is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Long Yuan Construction and Heilongjiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heilongjiang Publishing and Long Yuan 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 Long Yuan Construction are associated (or correlated) with Heilongjiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heilongjiang Publishing has no effect on the direction of Long Yuan i.e., Long Yuan and Heilongjiang Publishing go up and down completely randomly.

Pair Corralation between Long Yuan and Heilongjiang Publishing

Assuming the 90 days trading horizon Long Yuan Construction is expected to generate 0.83 times more return on investment than Heilongjiang Publishing. However, Long Yuan Construction is 1.2 times less risky than Heilongjiang Publishing. It trades about 0.0 of its potential returns per unit of risk. Heilongjiang Publishing Media is currently generating about -0.16 per unit of risk. If you would invest  414.00  in Long Yuan Construction on September 21, 2024 and sell it today you would lose (4.00) from holding Long Yuan Construction or give up 0.97% of portfolio value over 90 days.

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

Long Yuan Construction  vs.  Heilongjiang Publishing Media

Long Yuan Construction

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Long Yuan Construction are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Long Yuan sustained solid returns over the last few months and may actually be approaching a breakup point.

Heilongjiang Publishing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heilongjiang Publishing Media are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heilongjiang Publishing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Long Yuan and Heilongjiang Publishing

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

The idea behind Long Yuan Construction and Heilongjiang Publishing Media 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..