Correlation Between Anhui Transport and Soyea Technology

Can any of the company-specific risk be diversified away by investing in both Anhui Transport and Soyea Technology 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 Soyea Technology 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 Soyea Technology Co, you can compare the effects of market volatilities on Anhui Transport and Soyea Technology 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 Soyea Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Transport and Soyea Technology.

Diversification Opportunities for Anhui Transport and Soyea Technology

0.92

Correlation Coefficient

Anhui Transport  Soyea Technology

Almost no diversification

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

Pair Corralation between Anhui Transport and Soyea Technology

Assuming the 90 days trading horizon Anhui Transport is expected to generate 5.53 times less return on investment than Soyea Technology. But when comparing it to its historical volatility, Anhui Transport Consulting is 1.93 times less risky than Soyea Technology. It trades about 0.02 of its potential returns per unit of risk. Soyea Technology Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  541.00  in Soyea Technology Co on December 25, 2024 and sell it today you would earn a total of  38.00  from holding Soyea Technology Co or generate 7.02% 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.  Soyea Technology Co

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 1 (%) 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.

Soyea Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Soyea Technology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Soyea Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Anhui Transport and Soyea Technology

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

The idea behind Anhui Transport Consulting and Soyea Technology 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.