Correlation Between Anhui Transport and Zhejiang Publishing

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

Diversification Opportunities for Anhui Transport and Zhejiang Publishing

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Anhui and Zhejiang is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Transport Consulting and Zhejiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Publishing Media 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 Zhejiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Publishing Media has no effect on the direction of Anhui Transport i.e., Anhui Transport and Zhejiang Publishing go up and down completely randomly.

Pair Corralation between Anhui Transport and Zhejiang Publishing

Assuming the 90 days trading horizon Anhui Transport is expected to generate 1.1 times less return on investment than Zhejiang Publishing. But when comparing it to its historical volatility, Anhui Transport Consulting is 1.31 times less risky than Zhejiang Publishing. It trades about 0.02 of its potential returns per unit of risk. Zhejiang Publishing Media is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  765.00  in Zhejiang Publishing Media on October 7, 2024 and sell it today you would lose (3.00) from holding Zhejiang Publishing Media or give up 0.39% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Anhui Transport Consulting  vs.  Zhejiang Publishing Media

 Performance 
       Timeline  
Anhui Transport Cons 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Anhui Transport Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Zhejiang Publishing Media 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Zhejiang Publishing Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Anhui Transport and Zhejiang Publishing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Anhui Transport and Zhejiang Publishing

The main advantage of trading using opposite Anhui Transport and Zhejiang Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Transport position performs unexpectedly, Zhejiang 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 Zhejiang Publishing will offset losses from the drop in Zhejiang Publishing's long position.
The idea behind Anhui Transport Consulting and Zhejiang 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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