Correlation Between Industrial and Gansu Mogao

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

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

Diversification Opportunities for Industrial and Gansu Mogao

-0.79

Correlation Coefficient

Industrial  Gansu Mogao

Pay attention - limited upside

The 3 months correlation between Industrial and Gansu is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Gansu Mogao Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Mogao Industrial and Industrial 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 Industrial and Commercial are associated (or correlated) with Gansu Mogao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Mogao Industrial has no effect on the direction of Industrial i.e., Industrial and Gansu Mogao go up and down completely randomly.

Pair Corralation between Industrial and Gansu Mogao

Assuming the 90 days trading horizon Industrial and Commercial is expected to generate 0.32 times more return on investment than Gansu Mogao. However, Industrial and Commercial is 3.1 times less risky than Gansu Mogao. It trades about 0.24 of its potential returns per unit of risk. Gansu Mogao Industrial is currently generating about -0.37 per unit of risk. If you would invest  632.00  in Industrial and Commercial on October 9, 2024 and sell it today you would earn a total of  43.00  from holding Industrial and Commercial or generate 6.8% return on investment over 90 days.

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

Industrial and Commercial  vs.  Gansu Mogao Industrial

Industrial and Commercial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gansu Mogao Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gansu Mogao Industrial 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 Industrial and Gansu Mogao

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

The idea behind Industrial and Commercial and Gansu Mogao 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.