Correlation Between Anhui Transport and Aluminum Corp

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

Diversification Opportunities for Anhui Transport and Aluminum Corp

0.59

Correlation Coefficient

Anhui Transport  Aluminum Corp

Very weak diversification

The 3 months correlation between Anhui and Aluminum is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Transport Consulting and Aluminum Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum Corp 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 Aluminum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Corp has no effect on the direction of Anhui Transport i.e., Anhui Transport and Aluminum Corp go up and down completely randomly.

Pair Corralation between Anhui Transport and Aluminum Corp

Assuming the 90 days trading horizon Anhui Transport Consulting is expected to generate 0.89 times more return on investment than Aluminum Corp. However, Anhui Transport Consulting is 1.12 times less risky than Aluminum Corp. It trades about 0.13 of its potential returns per unit of risk. Aluminum Corp of is currently generating about 0.05 per unit of risk. If you would invest  770.00  in Anhui Transport Consulting on September 19, 2024 and sell it today you would earn a total of  164.00  from holding Anhui Transport Consulting or generate 21.3% return on investment over 90 days.

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

Anhui Transport Consulting  vs.  Aluminum Corp of

Anhui Transport Cons

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Transport Consulting are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Transport sustained solid returns over the last few months and may actually be approaching a breakup point.

Aluminum Corp

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Anhui Transport and Aluminum Corp

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

The idea behind Anhui Transport Consulting and Aluminum Corp of 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.