Correlation Between Guangdong Cellwise and Xinhua Winshare

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Can any of the company-specific risk be diversified away by investing in both Guangdong Cellwise and Xinhua Winshare 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 Guangdong Cellwise and Xinhua Winshare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Cellwise Microelectronics and Xinhua Winshare Publishing, you can compare the effects of market volatilities on Guangdong Cellwise and Xinhua Winshare 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 Guangdong Cellwise with a short position of Xinhua Winshare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Cellwise and Xinhua Winshare.

Diversification Opportunities for Guangdong Cellwise and Xinhua Winshare

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Guangdong and Xinhua is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Cellwise Microelectr and Xinhua Winshare Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinhua Winshare Publ and Guangdong Cellwise 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 Guangdong Cellwise Microelectronics are associated (or correlated) with Xinhua Winshare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinhua Winshare Publ has no effect on the direction of Guangdong Cellwise i.e., Guangdong Cellwise and Xinhua Winshare go up and down completely randomly.

Pair Corralation between Guangdong Cellwise and Xinhua Winshare

Assuming the 90 days trading horizon Guangdong Cellwise is expected to generate 6.21 times less return on investment than Xinhua Winshare. In addition to that, Guangdong Cellwise is 1.92 times more volatile than Xinhua Winshare Publishing. It trades about 0.03 of its total potential returns per unit of risk. Xinhua Winshare Publishing is currently generating about 0.3 per unit of volatility. If you would invest  1,432  in Xinhua Winshare Publishing on October 4, 2024 and sell it today you would earn a total of  153.00  from holding Xinhua Winshare Publishing or generate 10.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Guangdong Cellwise Microelectr  vs.  Xinhua Winshare Publishing

 Performance 
       Timeline  
Guangdong Cellwise 

Risk-Adjusted Performance

2 of 100

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

Risk-Adjusted Performance

0 of 100

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

Guangdong Cellwise and Xinhua Winshare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guangdong Cellwise and Xinhua Winshare

The main advantage of trading using opposite Guangdong Cellwise and Xinhua Winshare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Cellwise position performs unexpectedly, Xinhua Winshare 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 Xinhua Winshare will offset losses from the drop in Xinhua Winshare's long position.
The idea behind Guangdong Cellwise Microelectronics and Xinhua Winshare Publishing 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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