Correlation Between Gem Year and Anhui Gujing

Can any of the company-specific risk be diversified away by investing in both Gem Year and Anhui Gujing 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 Anhui Gujing 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 Anhui Gujing Distillery, you can compare the effects of market volatilities on Gem Year and Anhui Gujing 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 Anhui Gujing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Year and Anhui Gujing.

Diversification Opportunities for Gem Year and Anhui Gujing

0.69

Correlation Coefficient

Gem Year  Anhui Gujing

Poor diversification

The 3 months correlation between Gem and Anhui is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and Anhui Gujing Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Gujing Distillery 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 Anhui Gujing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Gujing Distillery has no effect on the direction of Gem Year i.e., Gem Year and Anhui Gujing go up and down completely randomly.

Pair Corralation between Gem Year and Anhui Gujing

Assuming the 90 days trading horizon Gem Year Industrial Co is expected to generate 0.82 times more return on investment than Anhui Gujing. However, Gem Year Industrial Co is 1.23 times less risky than Anhui Gujing. It trades about 0.16 of its potential returns per unit of risk. Anhui Gujing Distillery is currently generating about 0.01 per unit of risk. If you would invest  444.00  in Gem Year Industrial Co on September 17, 2024 and sell it today you would earn a total of  24.00  from holding Gem Year Industrial Co or generate 5.41% return on investment over 90 days.

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

Gem Year Industrial Co  vs.  Anhui Gujing Distillery

Gem Year Industrial

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem Year sustained solid returns over the last few months and may actually be approaching a breakup point.

Anhui Gujing Distillery

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Gujing Distillery are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Gujing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gem Year and Anhui Gujing

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

The idea behind Gem Year Industrial Co and Anhui Gujing Distillery 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .