Correlation Between Eastroc Beverage and Gansu Mogao

Can any of the company-specific risk be diversified away by investing in both Eastroc Beverage and Gansu Mogao 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 Eastroc Beverage and Gansu Mogao into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastroc Beverage Group and Gansu Mogao Industrial, you can compare the effects of market volatilities on Eastroc Beverage and Gansu Mogao 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 Eastroc Beverage with a short position of Gansu Mogao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastroc Beverage and Gansu Mogao.

Diversification Opportunities for Eastroc Beverage and Gansu Mogao

-0.07

Correlation Coefficient

Eastroc Beverage  Gansu Mogao

Good diversification

The 3 months correlation between Eastroc and Gansu is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and Gansu Mogao Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Mogao Industrial and Eastroc Beverage 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 Eastroc Beverage Group are associated (or correlated) with Gansu Mogao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Mogao Industrial has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and Gansu Mogao go up and down completely randomly.

Pair Corralation between Eastroc Beverage and Gansu Mogao

Assuming the 90 days trading horizon Eastroc Beverage Group is expected to under-perform the Gansu Mogao. But the stock apears to be less risky and, when comparing its historical volatility, Eastroc Beverage Group is 1.01 times less risky than Gansu Mogao. The stock trades about -0.02 of its potential returns per unit of risk. The Gansu Mogao Industrial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  467.00  in Gansu Mogao Industrial on December 25, 2024 and sell it today you would earn a total of  9.00  from holding Gansu Mogao Industrial or generate 1.93% return on investment over 90 days.

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

Eastroc Beverage Group  vs.  Gansu Mogao Industrial

Eastroc Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastroc Beverage Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eastroc Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gansu Mogao Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Mogao Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gansu Mogao is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eastroc Beverage and Gansu Mogao

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

The idea behind Eastroc Beverage Group and Gansu Mogao Industrial 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.