Correlation Between Xiamen Goldenhome and China Publishing

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

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

Diversification Opportunities for Xiamen Goldenhome and China Publishing

0.68

Correlation Coefficient

Xiamen Goldenhome  China Publishing

Poor diversification

The 3 months correlation between Xiamen and China is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xiamen Goldenhome Co and China Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Publishing Media and Xiamen Goldenhome 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 Xiamen Goldenhome Co are associated (or correlated) with China Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Publishing Media has no effect on the direction of Xiamen Goldenhome i.e., Xiamen Goldenhome and China Publishing go up and down completely randomly.

Pair Corralation between Xiamen Goldenhome and China Publishing

Assuming the 90 days trading horizon Xiamen Goldenhome Co is expected to under-perform the China Publishing. But the stock apears to be less risky and, when comparing its historical volatility, Xiamen Goldenhome Co is 1.24 times less risky than China Publishing. The stock trades about -0.03 of its potential returns per unit of risk. The China Publishing Media is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  928.00  in China Publishing Media on October 11, 2024 and sell it today you would lose (255.00) from holding China Publishing Media or give up 27.48% of portfolio value over 90 days.

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

Xiamen Goldenhome Co  vs.  China Publishing Media

Xiamen Goldenhome

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Goldenhome Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen Goldenhome may actually be approaching a critical reversion point that can send shares even higher in February 2025.

China Publishing Media

Risk-Adjusted Performance

2 of 100

Very Weak

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

Pair Trading with Xiamen Goldenhome and China Publishing

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

The idea behind Xiamen Goldenhome Co and China Publishing Media 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.