Correlation Between Xinjiang Baodi and Gansu Yasheng

Can any of the company-specific risk be diversified away by investing in both Xinjiang Baodi and Gansu Yasheng 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 Xinjiang Baodi and Gansu Yasheng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xinjiang Baodi Mining and Gansu Yasheng Industrial, you can compare the effects of market volatilities on Xinjiang Baodi and Gansu Yasheng 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 Xinjiang Baodi with a short position of Gansu Yasheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Baodi and Gansu Yasheng.

Diversification Opportunities for Xinjiang Baodi and Gansu Yasheng

0.0

Correlation Coefficient

Xinjiang Baodi  Gansu Yasheng

Pay attention - limited upside

The 3 months correlation between Xinjiang and Gansu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining and Gansu Yasheng Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Yasheng Industrial and Xinjiang Baodi 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 Xinjiang Baodi Mining are associated (or correlated) with Gansu Yasheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Yasheng Industrial has no effect on the direction of Xinjiang Baodi i.e., Xinjiang Baodi and Gansu Yasheng go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and Gansu Yasheng

If you would invest  662.00  in Xinjiang Baodi Mining on October 8, 2024 and sell it today you would earn a total of  9.00  from holding Xinjiang Baodi Mining or generate 1.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Xinjiang Baodi Mining  vs.  Gansu Yasheng Industrial

Xinjiang Baodi Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gansu Yasheng Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Xinjiang Baodi and Gansu Yasheng

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

The idea behind Xinjiang Baodi Mining and Gansu Yasheng Industrial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.