Correlation Between Gem Year and Huatian Hotel

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Can any of the company-specific risk be diversified away by investing in both Gem Year and Huatian Hotel 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 Gem Year and Huatian Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gem Year Industrial Co and Huatian Hotel Group, you can compare the effects of market volatilities on Gem Year and Huatian Hotel 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 Gem Year with a short position of Huatian Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Year and Huatian Hotel.

Diversification Opportunities for Gem Year and Huatian Hotel

GemHuatianDiversified AwayGemHuatianDiversified Away100%
0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Gem and Huatian is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and Huatian Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huatian Hotel Group and Gem Year 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 Gem Year Industrial Co are associated (or correlated) with Huatian Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huatian Hotel Group has no effect on the direction of Gem Year i.e., Gem Year and Huatian Hotel go up and down completely randomly.

Pair Corralation between Gem Year and Huatian Hotel

Assuming the 90 days trading horizon Gem Year Industrial Co is expected to generate 0.81 times more return on investment than Huatian Hotel. However, Gem Year Industrial Co is 1.24 times less risky than Huatian Hotel. It trades about 0.03 of its potential returns per unit of risk. Huatian Hotel Group is currently generating about -0.06 per unit of risk. If you would invest  440.00  in Gem Year Industrial Co on October 31, 2024 and sell it today you would earn a total of  9.00  from holding Gem Year Industrial Co or generate 2.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Gem Year Industrial Co  vs.  Huatian Hotel Group

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -100102030
JavaScript chart by amCharts 3.21.15601002 000428
       Timeline  
Gem Year Industrial 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gem Year is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanJan44.24.44.64.85
Huatian Hotel Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Huatian Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15DecJanJan33.23.43.63.84

Gem Year and Huatian Hotel Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.95-6.7-4.45-2.210.02.364.767.159.55 0.0200.0250.0300.0350.0400.045
JavaScript chart by amCharts 3.21.15601002 000428
       Returns  

Pair Trading with Gem Year and Huatian Hotel

The main advantage of trading using opposite Gem Year and Huatian Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gem Year position performs unexpectedly, Huatian Hotel 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 Huatian Hotel will offset losses from the drop in Huatian Hotel's long position.
The idea behind Gem Year Industrial Co and Huatian Hotel Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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