Correlation Between Anhui Transport and JiShi Media

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

Diversification Opportunities for Anhui Transport and JiShi Media

0.46

Correlation Coefficient

Anhui Transport  JiShi Media

Very weak diversification

The 3 months correlation between Anhui and JiShi is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Transport Consulting and JiShi Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JiShi 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 JiShi Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JiShi Media has no effect on the direction of Anhui Transport i.e., Anhui Transport and JiShi Media go up and down completely randomly.

Pair Corralation between Anhui Transport and JiShi Media

Assuming the 90 days trading horizon Anhui Transport Consulting is expected to generate 0.83 times more return on investment than JiShi Media. However, Anhui Transport Consulting is 1.2 times less risky than JiShi Media. It trades about 0.02 of its potential returns per unit of risk. JiShi Media Co is currently generating about 0.01 per unit of risk. If you would invest  757.00  in Anhui Transport Consulting on October 18, 2024 and sell it today you would earn a total of  103.00  from holding Anhui Transport Consulting or generate 13.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Anhui Transport Consulting  vs.  JiShi Media Co

Anhui Transport Cons

Risk-Adjusted Performance

0 of 100

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 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.

JiShi Media

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JiShi Media Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JiShi Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Transport and JiShi Media

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

The idea behind Anhui Transport Consulting and JiShi Media 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.