Correlation Between Harbin Hatou and Zhangjiagang Freetrade

Can any of the company-specific risk be diversified away by investing in both Harbin Hatou and Zhangjiagang Freetrade 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 Harbin Hatou and Zhangjiagang Freetrade into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Harbin Hatou Investment and Zhangjiagang Freetrade Science, you can compare the effects of market volatilities on Harbin Hatou and Zhangjiagang Freetrade 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 Harbin Hatou with a short position of Zhangjiagang Freetrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbin Hatou and Zhangjiagang Freetrade.

Diversification Opportunities for Harbin Hatou and Zhangjiagang Freetrade

0.75

Correlation Coefficient

Harbin Hatou  Zhangjiagang Freetrade

Poor diversification

The 3 months correlation between Harbin and Zhangjiagang is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Harbin Hatou Investment and Zhangjiagang Freetrade Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhangjiagang Freetrade and Harbin Hatou 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 Harbin Hatou Investment are associated (or correlated) with Zhangjiagang Freetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhangjiagang Freetrade has no effect on the direction of Harbin Hatou i.e., Harbin Hatou and Zhangjiagang Freetrade go up and down completely randomly.

Pair Corralation between Harbin Hatou and Zhangjiagang Freetrade

Assuming the 90 days trading horizon Harbin Hatou Investment is expected to under-perform the Zhangjiagang Freetrade. In addition to that, Harbin Hatou is 1.55 times more volatile than Zhangjiagang Freetrade Science. It trades about -0.16 of its total potential returns per unit of risk. Zhangjiagang Freetrade Science is currently generating about -0.06 per unit of volatility. If you would invest  373.00  in Zhangjiagang Freetrade Science on December 28, 2024 and sell it today you would lose (18.00) from holding Zhangjiagang Freetrade Science or give up 4.83% of portfolio value over 90 days.

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

Harbin Hatou Investment  vs.  Zhangjiagang Freetrade Science

Harbin Hatou Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harbin Hatou Investment 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.

Zhangjiagang Freetrade

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Harbin Hatou and Zhangjiagang Freetrade

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

The idea behind Harbin Hatou Investment and Zhangjiagang Freetrade Science 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 Transaction History module to view history of all your transactions and understand their impact on performance.