Correlation Between China Publishing and Gansu Yasheng

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

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

Diversification Opportunities for China Publishing and Gansu Yasheng

0.82

Correlation Coefficient

China Publishing  Gansu Yasheng

Very poor diversification

The 3 months correlation between China and Gansu is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding China Publishing Media and Gansu Yasheng Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Yasheng Industrial and China Publishing 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 China Publishing Media are associated (or correlated) with Gansu Yasheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Yasheng Industrial has no effect on the direction of China Publishing i.e., China Publishing and Gansu Yasheng go up and down completely randomly.

Pair Corralation between China Publishing and Gansu Yasheng

Assuming the 90 days trading horizon China Publishing Media is expected to generate 1.44 times more return on investment than Gansu Yasheng. However, China Publishing is 1.44 times more volatile than Gansu Yasheng Industrial. It trades about 0.02 of its potential returns per unit of risk. Gansu Yasheng Industrial is currently generating about 0.02 per unit of risk. If you would invest  682.00  in China Publishing Media on October 24, 2024 and sell it today you would earn a total of  0.00  from holding China Publishing Media or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

China Publishing Media  vs.  Gansu Yasheng Industrial

China Publishing Media

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Publishing Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gansu Yasheng Industrial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Yasheng Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gansu Yasheng is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Publishing and Gansu Yasheng

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

The idea behind China Publishing Media and Gansu Yasheng 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.