Correlation Between Kweichow Moutai and Guangxi Wuzhou

Can any of the company-specific risk be diversified away by investing in both Kweichow Moutai and Guangxi Wuzhou 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 Kweichow Moutai and Guangxi Wuzhou into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kweichow Moutai Co and Guangxi Wuzhou Communications, you can compare the effects of market volatilities on Kweichow Moutai and Guangxi Wuzhou 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 Kweichow Moutai with a short position of Guangxi Wuzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kweichow Moutai and Guangxi Wuzhou.

Diversification Opportunities for Kweichow Moutai and Guangxi Wuzhou

0.78

Correlation Coefficient

Kweichow Moutai  Guangxi Wuzhou

Poor diversification

The 3 months correlation between Kweichow and Guangxi is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kweichow Moutai Co and Guangxi Wuzhou Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangxi Wuzhou Commu and Kweichow Moutai 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 Kweichow Moutai Co are associated (or correlated) with Guangxi Wuzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangxi Wuzhou Commu has no effect on the direction of Kweichow Moutai i.e., Kweichow Moutai and Guangxi Wuzhou go up and down completely randomly.

Pair Corralation between Kweichow Moutai and Guangxi Wuzhou

Assuming the 90 days trading horizon Kweichow Moutai is expected to generate 1.31 times less return on investment than Guangxi Wuzhou. In addition to that, Kweichow Moutai is 1.34 times more volatile than Guangxi Wuzhou Communications. It trades about 0.12 of its total potential returns per unit of risk. Guangxi Wuzhou Communications is currently generating about 0.21 per unit of volatility. If you would invest  322.00  in Guangxi Wuzhou Communications on September 13, 2024 and sell it today you would earn a total of  83.00  from holding Guangxi Wuzhou Communications or generate 25.78% return on investment over 90 days.

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

Kweichow Moutai Co  vs.  Guangxi Wuzhou Communications

Kweichow Moutai

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kweichow Moutai Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kweichow Moutai sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangxi Wuzhou Commu

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangxi Wuzhou Communications are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangxi Wuzhou sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kweichow Moutai and Guangxi Wuzhou

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

The idea behind Kweichow Moutai Co and Guangxi Wuzhou Communications 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.