Correlation Between Cinda Securities and Hunan Investment

Can any of the company-specific risk be diversified away by investing in both Cinda Securities and Hunan Investment 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 Cinda Securities and Hunan Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cinda Securities Co and Hunan Investment Group, you can compare the effects of market volatilities on Cinda Securities and Hunan Investment 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 Cinda Securities with a short position of Hunan Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cinda Securities and Hunan Investment.

Diversification Opportunities for Cinda Securities and Hunan Investment

-0.02

Correlation Coefficient

Cinda Securities  Hunan Investment

Good diversification

The 3 months correlation between Cinda and Hunan is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cinda Securities Co and Hunan Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Investment and Cinda Securities 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 Cinda Securities Co are associated (or correlated) with Hunan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Investment has no effect on the direction of Cinda Securities i.e., Cinda Securities and Hunan Investment go up and down completely randomly.

Pair Corralation between Cinda Securities and Hunan Investment

Assuming the 90 days trading horizon Cinda Securities Co is expected to generate 1.09 times more return on investment than Hunan Investment. However, Cinda Securities is 1.09 times more volatile than Hunan Investment Group. It trades about -0.18 of its potential returns per unit of risk. Hunan Investment Group is currently generating about -0.36 per unit of risk. If you would invest  1,536  in Cinda Securities Co on October 8, 2024 and sell it today you would lose (151.00) from holding Cinda Securities Co or give up 9.83% of portfolio value over 90 days.

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

Cinda Securities Co  vs.  Hunan Investment Group

Cinda Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cinda Securities Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hunan Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hunan Investment 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.

Pair Trading with Cinda Securities and Hunan Investment

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

The idea behind Cinda Securities Co and Hunan Investment 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.