Correlation Between Heilongjiang Transport and Northern United

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

Diversification Opportunities for Heilongjiang Transport and Northern United

0.95

Correlation Coefficient

Heilongjiang Transport  Northern United

Almost no diversification

The 3 months correlation between Heilongjiang and Northern is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Transport Develop and Northern United Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern United Publ 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 Northern United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern United Publ has no effect on the direction of Heilongjiang Transport i.e., Heilongjiang Transport and Northern United go up and down completely randomly.

Pair Corralation between Heilongjiang Transport and Northern United

Assuming the 90 days trading horizon Heilongjiang Transport Development is expected to generate 0.98 times more return on investment than Northern United. However, Heilongjiang Transport Development is 1.02 times less risky than Northern United. It trades about 0.03 of its potential returns per unit of risk. Northern United Publishing is currently generating about 0.02 per unit of risk. If you would invest  317.00  in Heilongjiang Transport Development on September 22, 2024 and sell it today you would earn a total of  65.00  from holding Heilongjiang Transport Development or generate 20.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.79%
Values	Daily Returns

Heilongjiang Transport Develop  vs.  Northern United Publishing

Heilongjiang Transport

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heilongjiang Transport Development are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heilongjiang Transport sustained solid returns over the last few months and may actually be approaching a breakup point.

Northern United Publ

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern United Publishing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Northern United sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heilongjiang Transport and Northern United

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

The idea behind Heilongjiang Transport Development and Northern United Publishing 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.