Correlation Between Gem-Year Industrial and Beijing-Shanghai

Can any of the company-specific risk be diversified away by investing in both Gem-Year Industrial and Beijing-Shanghai 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 Industrial and Beijing-Shanghai 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 Beijing Shanghai High Speed, you can compare the effects of market volatilities on Gem-Year Industrial and Beijing-Shanghai 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 Industrial with a short position of Beijing-Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem-Year Industrial and Beijing-Shanghai.

Diversification Opportunities for Gem-Year Industrial and Beijing-Shanghai

-0.49

Correlation Coefficient

Gem-Year Industrial  Beijing-Shanghai

Very good diversification

The 3 months correlation between Gem-Year and Beijing-Shanghai is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and Beijing Shanghai High Speed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Shanghai High and Gem-Year Industrial 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 Beijing-Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Shanghai High has no effect on the direction of Gem-Year Industrial i.e., Gem-Year Industrial and Beijing-Shanghai go up and down completely randomly.

Pair Corralation between Gem-Year Industrial and Beijing-Shanghai

Assuming the 90 days trading horizon Gem Year Industrial Co is expected to generate 2.51 times more return on investment than Beijing-Shanghai. However, Gem-Year Industrial is 2.51 times more volatile than Beijing Shanghai High Speed. It trades about 0.09 of its potential returns per unit of risk. Beijing Shanghai High Speed is currently generating about -0.23 per unit of risk. If you would invest  434.00  in Gem Year Industrial Co on December 25, 2024 and sell it today you would earn a total of  51.00  from holding Gem Year Industrial Co or generate 11.75% return on investment over 90 days.

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

Gem Year Industrial Co  vs.  Beijing Shanghai High Speed

Gem Year Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem-Year Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Beijing Shanghai High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijing Shanghai High Speed 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.

Pair Trading with Gem-Year Industrial and Beijing-Shanghai

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

The idea behind Gem Year Industrial Co and Beijing Shanghai High Speed 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.