Correlation Between Xinjiang Baodi and Anhui Transport

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

Diversification Opportunities for Xinjiang Baodi and Anhui Transport

0.25

Correlation Coefficient

Xinjiang Baodi  Anhui Transport

Modest diversification

The 3 months correlation between Xinjiang and Anhui is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining and Anhui Transport Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Transport Cons 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 Anhui Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Transport Cons has no effect on the direction of Xinjiang Baodi i.e., Xinjiang Baodi and Anhui Transport go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and Anhui Transport

Assuming the 90 days trading horizon Xinjiang Baodi is expected to generate 1.02 times less return on investment than Anhui Transport. In addition to that, Xinjiang Baodi is 1.05 times more volatile than Anhui Transport Consulting. It trades about 0.02 of its total potential returns per unit of risk. Anhui Transport Consulting is currently generating about 0.02 per unit of volatility. If you would invest  757.00  in Anhui Transport Consulting on October 12, 2024 and sell it today you would earn a total of  111.00  from holding Anhui Transport Consulting or generate 14.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.71%
Values	Daily Returns

Xinjiang Baodi Mining  vs.  Anhui Transport Consulting

Xinjiang Baodi Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Baodi Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Baodi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Anhui Transport Cons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Transport Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Anhui Transport 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 Anhui Transport

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

The idea behind Xinjiang Baodi Mining and Anhui Transport Consulting 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.