Correlation Between Hefei Metalforming and Guangdong Jingyi

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

By analyzing existing cross correlation between Hefei Metalforming Mach and Guangdong Jingyi Metal, you can compare the effects of market volatilities on Hefei Metalforming and Guangdong Jingyi 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 Hefei Metalforming with a short position of Guangdong Jingyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Guangdong Jingyi.

Diversification Opportunities for Hefei Metalforming and Guangdong Jingyi

0.87

Correlation Coefficient

Hefei Metalforming  Guangdong Jingyi

Very poor diversification

The 3 months correlation between Hefei and Guangdong is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Guangdong Jingyi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Jingyi Metal and Hefei Metalforming 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 Hefei Metalforming Mach are associated (or correlated) with Guangdong Jingyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Jingyi Metal has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Guangdong Jingyi go up and down completely randomly.

Pair Corralation between Hefei Metalforming and Guangdong Jingyi

Assuming the 90 days trading horizon Hefei Metalforming Mach is expected to under-perform the Guangdong Jingyi. In addition to that, Hefei Metalforming is 1.02 times more volatile than Guangdong Jingyi Metal. It trades about -0.2 of its total potential returns per unit of risk. Guangdong Jingyi Metal is currently generating about -0.1 per unit of volatility. If you would invest  726.00  in Guangdong Jingyi Metal on September 27, 2024 and sell it today you would lose (44.00) from holding Guangdong Jingyi Metal or give up 6.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Hefei Metalforming Mach  vs.  Guangdong Jingyi Metal

Hefei Metalforming Mach

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hefei Metalforming Mach are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hefei Metalforming sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Jingyi Metal

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hefei Metalforming and Guangdong Jingyi

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

The idea behind Hefei Metalforming Mach and Guangdong Jingyi Metal 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.