Correlation Between Heilongjiang Publishing and Sany Heavy

Can any of the company-specific risk be diversified away by investing in both Heilongjiang Publishing and Sany Heavy 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 Heilongjiang Publishing and Sany Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heilongjiang Publishing Media and Sany Heavy Energy, you can compare the effects of market volatilities on Heilongjiang Publishing and Sany Heavy 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 Heilongjiang Publishing with a short position of Sany Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Publishing and Sany Heavy.

Diversification Opportunities for Heilongjiang Publishing and Sany Heavy

0.86

Correlation Coefficient

Heilongjiang Publishing  Sany Heavy

Very poor diversification

The 3 months correlation between Heilongjiang and Sany is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Publishing Media and Sany Heavy Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sany Heavy Energy and Heilongjiang Publishing 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 Heilongjiang Publishing Media are associated (or correlated) with Sany Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sany Heavy Energy has no effect on the direction of Heilongjiang Publishing i.e., Heilongjiang Publishing and Sany Heavy go up and down completely randomly.

Pair Corralation between Heilongjiang Publishing and Sany Heavy

Assuming the 90 days trading horizon Heilongjiang Publishing is expected to generate 1.29 times less return on investment than Sany Heavy. In addition to that, Heilongjiang Publishing is 1.01 times more volatile than Sany Heavy Energy. It trades about 0.14 of its total potential returns per unit of risk. Sany Heavy Energy is currently generating about 0.18 per unit of volatility. If you would invest  2,194  in Sany Heavy Energy on September 23, 2024 and sell it today you would earn a total of  1,006  from holding Sany Heavy Energy or generate 45.85% return on investment over 90 days.

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

Heilongjiang Publishing Media  vs.  Sany Heavy Energy

Heilongjiang Publishing

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heilongjiang Publishing Media are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heilongjiang Publishing sustained solid returns over the last few months and may actually be approaching a breakup point.

Sany Heavy Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sany Heavy Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sany Heavy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heilongjiang Publishing and Sany Heavy

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

The idea behind Heilongjiang Publishing Media and Sany Heavy Energy 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.

Check out your portfolio center.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.