Correlation Between Heilongjiang Transport and Guangzhou Jinyi

Can any of the company-specific risk be diversified away by investing in both Heilongjiang Transport and Guangzhou Jinyi 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 Heilongjiang Transport and Guangzhou Jinyi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heilongjiang Transport Development and Guangzhou Jinyi Media, you can compare the effects of market volatilities on Heilongjiang Transport and Guangzhou Jinyi 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 Heilongjiang Transport with a short position of Guangzhou Jinyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Transport and Guangzhou Jinyi.

Diversification Opportunities for Heilongjiang Transport and Guangzhou Jinyi

0.78

Correlation Coefficient

Heilongjiang Transport  Guangzhou Jinyi

Poor diversification

The 3 months correlation between Heilongjiang and Guangzhou is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Transport Develop and Guangzhou Jinyi Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jinyi Media and Heilongjiang Transport 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 Heilongjiang Transport Development are associated (or correlated) with Guangzhou Jinyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jinyi Media has no effect on the direction of Heilongjiang Transport i.e., Heilongjiang Transport and Guangzhou Jinyi go up and down completely randomly.

Pair Corralation between Heilongjiang Transport and Guangzhou Jinyi

Assuming the 90 days trading horizon Heilongjiang Transport is expected to generate 1.01 times less return on investment than Guangzhou Jinyi. But when comparing it to its historical volatility, Heilongjiang Transport Development is 1.14 times less risky than Guangzhou Jinyi. It trades about 0.01 of its potential returns per unit of risk. Guangzhou Jinyi Media is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  842.00  in Guangzhou Jinyi Media on December 7, 2024 and sell it today you would lose (116.00) from holding Guangzhou Jinyi Media or give up 13.78% of portfolio value over 90 days.

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

Heilongjiang Transport Develop  vs.  Guangzhou Jinyi Media

Heilongjiang Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heilongjiang Transport Development 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.

Guangzhou Jinyi Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangzhou Jinyi Media 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 Heilongjiang Transport and Guangzhou Jinyi

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

The idea behind Heilongjiang Transport Development and Guangzhou Jinyi Media 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.