Correlation Between Hangzhou Pinming and Guangzhou Jointas

Can any of the company-specific risk be diversified away by investing in both Hangzhou Pinming and Guangzhou Jointas 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 Hangzhou Pinming and Guangzhou Jointas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hangzhou Pinming Software and Guangzhou Jointas Chemical, you can compare the effects of market volatilities on Hangzhou Pinming and Guangzhou Jointas 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 Hangzhou Pinming with a short position of Guangzhou Jointas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hangzhou Pinming and Guangzhou Jointas.

Diversification Opportunities for Hangzhou Pinming and Guangzhou Jointas

0.7

Correlation Coefficient

Hangzhou Pinming  Guangzhou Jointas

Poor diversification

The 3 months correlation between Hangzhou and Guangzhou is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Pinming Software and Guangzhou Jointas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jointas and Hangzhou Pinming 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 Hangzhou Pinming Software are associated (or correlated) with Guangzhou Jointas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jointas has no effect on the direction of Hangzhou Pinming i.e., Hangzhou Pinming and Guangzhou Jointas go up and down completely randomly.

Pair Corralation between Hangzhou Pinming and Guangzhou Jointas

Assuming the 90 days trading horizon Hangzhou Pinming Software is expected to under-perform the Guangzhou Jointas. But the stock apears to be less risky and, when comparing its historical volatility, Hangzhou Pinming Software is 1.0 times less risky than Guangzhou Jointas. The stock trades about -0.05 of its potential returns per unit of risk. The Guangzhou Jointas Chemical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  496.00  in Guangzhou Jointas Chemical on October 25, 2024 and sell it today you would earn a total of  21.00  from holding Guangzhou Jointas Chemical or generate 4.23% return on investment over 90 days.

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

Hangzhou Pinming Software  vs.  Guangzhou Jointas Chemical

Hangzhou Pinming Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hangzhou Pinming Software 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.

Guangzhou Jointas

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Jointas Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Jointas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hangzhou Pinming and Guangzhou Jointas

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

The idea behind Hangzhou Pinming Software and Guangzhou Jointas Chemical 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.