Correlation Between Jiangsu Seagull and Hwabao WP

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

By analyzing existing cross correlation between Jiangsu Seagull Cooling and Hwabao WP CSI, you can compare the effects of market volatilities on Jiangsu Seagull and Hwabao WP 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 Jiangsu Seagull with a short position of Hwabao WP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Seagull and Hwabao WP.

Diversification Opportunities for Jiangsu Seagull and Hwabao WP

-0.31

Correlation Coefficient

Jiangsu Seagull  Hwabao WP

Very good diversification

The 3 months correlation between Jiangsu and Hwabao is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Seagull Cooling and Hwabao WP CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwabao WP CSI and Jiangsu Seagull 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 Jiangsu Seagull Cooling are associated (or correlated) with Hwabao WP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwabao WP CSI has no effect on the direction of Jiangsu Seagull i.e., Jiangsu Seagull and Hwabao WP go up and down completely randomly.

Pair Corralation between Jiangsu Seagull and Hwabao WP

Assuming the 90 days trading horizon Jiangsu Seagull Cooling is expected to generate 3.32 times more return on investment than Hwabao WP. However, Jiangsu Seagull is 3.32 times more volatile than Hwabao WP CSI. It trades about 0.13 of its potential returns per unit of risk. Hwabao WP CSI is currently generating about -0.05 per unit of risk. If you would invest  973.00  in Jiangsu Seagull Cooling on October 22, 2024 and sell it today you would earn a total of  134.00  from holding Jiangsu Seagull Cooling or generate 13.77% return on investment over 90 days.

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

Jiangsu Seagull Cooling  vs.  Hwabao WP CSI

Jiangsu Seagull Cooling

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Seagull Cooling are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Seagull sustained solid returns over the last few months and may actually be approaching a breakup point.

Hwabao WP CSI

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jiangsu Seagull and Hwabao WP

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

The idea behind Jiangsu Seagull Cooling and Hwabao WP CSI 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.