Correlation Between AVIC UAS and Guilin Seamild

Can any of the company-specific risk be diversified away by investing in both AVIC UAS and Guilin Seamild 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 AVIC UAS and Guilin Seamild into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AVIC UAS Co and Guilin Seamild Foods, you can compare the effects of market volatilities on AVIC UAS and Guilin Seamild 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 AVIC UAS with a short position of Guilin Seamild. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVIC UAS and Guilin Seamild.

Diversification Opportunities for AVIC UAS and Guilin Seamild

0.54

Correlation Coefficient

AVIC UAS  Guilin Seamild

Very weak diversification

The 3 months correlation between AVIC and Guilin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding AVIC UAS Co and Guilin Seamild Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guilin Seamild Foods and AVIC UAS 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 AVIC UAS Co are associated (or correlated) with Guilin Seamild. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guilin Seamild Foods has no effect on the direction of AVIC UAS i.e., AVIC UAS and Guilin Seamild go up and down completely randomly.

Pair Corralation between AVIC UAS and Guilin Seamild

Assuming the 90 days trading horizon AVIC UAS Co is expected to generate 1.92 times more return on investment than Guilin Seamild. However, AVIC UAS is 1.92 times more volatile than Guilin Seamild Foods. It trades about 0.14 of its potential returns per unit of risk. Guilin Seamild Foods is currently generating about 0.26 per unit of risk. If you would invest  2,820  in AVIC UAS Co on September 20, 2024 and sell it today you would earn a total of  1,324  from holding AVIC UAS Co or generate 46.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

AVIC UAS Co  vs.  Guilin Seamild Foods

AVIC UAS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC UAS Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AVIC UAS sustained solid returns over the last few months and may actually be approaching a breakup point.

Guilin Seamild Foods

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guilin Seamild Foods are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guilin Seamild sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVIC UAS and Guilin Seamild

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

The idea behind AVIC UAS Co and Guilin Seamild Foods 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.