Correlation Between Hainan Haiqi and Jiugui Liquor

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

By analyzing existing cross correlation between Hainan Haiqi Transportation and Jiugui Liquor Co, you can compare the effects of market volatilities on Hainan Haiqi and Jiugui Liquor 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 Hainan Haiqi with a short position of Jiugui Liquor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Haiqi and Jiugui Liquor.

Diversification Opportunities for Hainan Haiqi and Jiugui Liquor

0.81

Correlation Coefficient

Hainan Haiqi  Jiugui Liquor

Very poor diversification

The 3 months correlation between Hainan and Jiugui is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Haiqi Transportation and Jiugui Liquor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiugui Liquor and Hainan Haiqi 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 Hainan Haiqi Transportation are associated (or correlated) with Jiugui Liquor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiugui Liquor has no effect on the direction of Hainan Haiqi i.e., Hainan Haiqi and Jiugui Liquor go up and down completely randomly.

Pair Corralation between Hainan Haiqi and Jiugui Liquor

Assuming the 90 days trading horizon Hainan Haiqi Transportation is expected to under-perform the Jiugui Liquor. In addition to that, Hainan Haiqi is 1.46 times more volatile than Jiugui Liquor Co. It trades about -0.28 of its total potential returns per unit of risk. Jiugui Liquor Co is currently generating about -0.23 per unit of volatility. If you would invest  6,115  in Jiugui Liquor Co on October 1, 2024 and sell it today you would lose (502.00) from holding Jiugui Liquor Co or give up 8.21% of portfolio value over 90 days.

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

Hainan Haiqi Transportation  vs.  Jiugui Liquor Co

Hainan Haiqi Transpo

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan Haiqi Transportation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hainan Haiqi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jiugui Liquor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiugui Liquor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jiugui Liquor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hainan Haiqi and Jiugui Liquor

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

The idea behind Hainan Haiqi Transportation and Jiugui Liquor Co 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.