Correlation Between Anyang Iron and Guizhou BroadcastingTV

Can any of the company-specific risk be diversified away by investing in both Anyang Iron and Guizhou BroadcastingTV 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 Anyang Iron and Guizhou BroadcastingTV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anyang Iron Steel and Guizhou BroadcastingTV Info, you can compare the effects of market volatilities on Anyang Iron and Guizhou BroadcastingTV 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 Anyang Iron with a short position of Guizhou BroadcastingTV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anyang Iron and Guizhou BroadcastingTV.

Diversification Opportunities for Anyang Iron and Guizhou BroadcastingTV

0.51

Correlation Coefficient

Anyang Iron  Guizhou BroadcastingTV

Very weak diversification

The 3 months correlation between Anyang and Guizhou is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Anyang Iron Steel and Guizhou BroadcastingTV Info in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou BroadcastingTV and Anyang Iron 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 Anyang Iron Steel are associated (or correlated) with Guizhou BroadcastingTV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou BroadcastingTV has no effect on the direction of Anyang Iron i.e., Anyang Iron and Guizhou BroadcastingTV go up and down completely randomly.

Pair Corralation between Anyang Iron and Guizhou BroadcastingTV

Assuming the 90 days trading horizon Anyang Iron is expected to generate 3.41 times less return on investment than Guizhou BroadcastingTV. But when comparing it to its historical volatility, Anyang Iron Steel is 1.74 times less risky than Guizhou BroadcastingTV. It trades about 0.03 of its potential returns per unit of risk. Guizhou BroadcastingTV Info is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  875.00  in Guizhou BroadcastingTV Info on December 25, 2024 and sell it today you would earn a total of  84.00  from holding Guizhou BroadcastingTV Info or generate 9.6% return on investment over 90 days.

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

Anyang Iron Steel  vs.  Guizhou BroadcastingTV Info

Anyang Iron Steel

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anyang Iron Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Anyang Iron is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guizhou BroadcastingTV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guizhou BroadcastingTV Info are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guizhou BroadcastingTV sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anyang Iron and Guizhou BroadcastingTV

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

The idea behind Anyang Iron Steel and Guizhou BroadcastingTV Info 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.