Correlation Between Anhui Transport and Aerospace

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

By analyzing existing cross correlation between Anhui Transport Consulting and Aerospace Hi Tech Holding, you can compare the effects of market volatilities on Anhui Transport and Aerospace 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 Anhui Transport with a short position of Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Transport and Aerospace.

Diversification Opportunities for Anhui Transport and Aerospace

0.92

Correlation Coefficient

Anhui Transport  Aerospace

Almost no diversification

The 3 months correlation between Anhui and Aerospace is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Transport Consulting and Aerospace Hi Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerospace Hi Tech and Anhui Transport 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 Anhui Transport Consulting are associated (or correlated) with Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerospace Hi Tech has no effect on the direction of Anhui Transport i.e., Anhui Transport and Aerospace go up and down completely randomly.

Pair Corralation between Anhui Transport and Aerospace

Assuming the 90 days trading horizon Anhui Transport Consulting is expected to generate 0.58 times more return on investment than Aerospace. However, Anhui Transport Consulting is 1.71 times less risky than Aerospace. It trades about 0.03 of its potential returns per unit of risk. Aerospace Hi Tech Holding is currently generating about 0.01 per unit of risk. If you would invest  911.00  in Anhui Transport Consulting on December 26, 2024 and sell it today you would earn a total of  14.00  from holding Anhui Transport Consulting or generate 1.54% return on investment over 90 days.

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

Anhui Transport Consulting  vs.  Aerospace Hi Tech Holding

Anhui Transport Cons

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Transport Consulting are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Anhui Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aerospace Hi Tech

Risk-Adjusted Performance

Weak

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

Pair Trading with Anhui Transport and Aerospace

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

The idea behind Anhui Transport Consulting and Aerospace Hi Tech Holding 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 Stocks Directory module to find actively traded stocks across global markets.