Correlation Between AUPU Home and Hengerda New

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

By analyzing existing cross correlation between AUPU Home Style and Hengerda New Materials, you can compare the effects of market volatilities on AUPU Home and Hengerda New 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 AUPU Home with a short position of Hengerda New. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUPU Home and Hengerda New.

Diversification Opportunities for AUPU Home and Hengerda New

0.59

Correlation Coefficient

AUPU Home  Hengerda New

Very weak diversification

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

Pair Corralation between AUPU Home and Hengerda New

Assuming the 90 days trading horizon AUPU Home Style is expected to generate 0.78 times more return on investment than Hengerda New. However, AUPU Home Style is 1.28 times less risky than Hengerda New. It trades about 0.04 of its potential returns per unit of risk. Hengerda New Materials is currently generating about -0.04 per unit of risk. If you would invest  1,033  in AUPU Home Style on October 10, 2024 and sell it today you would earn a total of  46.00  from holding AUPU Home Style or generate 4.45% return on investment over 90 days.

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

AUPU Home Style  vs.  Hengerda New Materials

AUPU Home Style

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AUPU Home Style are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AUPU Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hengerda New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hengerda New Materials 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.

Pair Trading with AUPU Home and Hengerda New

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

The idea behind AUPU Home Style and Hengerda New Materials 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 Commodity Directory module to find actively traded commodities issued by global exchanges.