Correlation Between Heilongjiang Transport and Imeik Technology

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

Diversification Opportunities for Heilongjiang Transport and Imeik Technology

0.25

Correlation Coefficient

Heilongjiang Transport  Imeik Technology

Modest diversification

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

Pair Corralation between Heilongjiang Transport and Imeik Technology

Assuming the 90 days trading horizon Heilongjiang Transport Development is expected to generate 0.99 times more return on investment than Imeik Technology. However, Heilongjiang Transport Development is 1.01 times less risky than Imeik Technology. It trades about 0.02 of its potential returns per unit of risk. Imeik Technology Development is currently generating about -0.03 per unit of risk. If you would invest  331.00  in Heilongjiang Transport Development on October 4, 2024 and sell it today you would earn a total of  25.00  from holding Heilongjiang Transport Development or generate 7.55% return on investment over 90 days.

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

Heilongjiang Transport Develop  vs.  Imeik Technology Development

Heilongjiang Transport

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Heilongjiang Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Imeik Technology Dev

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Heilongjiang Transport and Imeik Technology

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

The idea behind Heilongjiang Transport Development and Imeik Technology Development 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.