Correlation Between Anhui Huaheng and Shanghai Rightongene

Can any of the company-specific risk be diversified away by investing in both Anhui Huaheng and Shanghai Rightongene 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 Anhui Huaheng and Shanghai Rightongene into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anhui Huaheng Biotechnology and Shanghai Rightongene Biotechnology, you can compare the effects of market volatilities on Anhui Huaheng and Shanghai Rightongene 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 Anhui Huaheng with a short position of Shanghai Rightongene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Huaheng and Shanghai Rightongene.

Diversification Opportunities for Anhui Huaheng and Shanghai Rightongene

0.45

Correlation Coefficient

Anhui Huaheng  Shanghai Rightongene

Very weak diversification

The 3 months correlation between Anhui and Shanghai is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Huaheng Biotechnology and Shanghai Rightongene Biotechno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Rightongene and Anhui Huaheng 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 Anhui Huaheng Biotechnology are associated (or correlated) with Shanghai Rightongene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Rightongene has no effect on the direction of Anhui Huaheng i.e., Anhui Huaheng and Shanghai Rightongene go up and down completely randomly.

Pair Corralation between Anhui Huaheng and Shanghai Rightongene

Assuming the 90 days trading horizon Anhui Huaheng Biotechnology is expected to under-perform the Shanghai Rightongene. But the stock apears to be less risky and, when comparing its historical volatility, Anhui Huaheng Biotechnology is 1.25 times less risky than Shanghai Rightongene. The stock trades about -0.37 of its potential returns per unit of risk. The Shanghai Rightongene Biotechnology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,026  in Shanghai Rightongene Biotechnology on October 22, 2024 and sell it today you would lose (46.00) from holding Shanghai Rightongene Biotechnology or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Anhui Huaheng Biotechnology  vs.  Shanghai Rightongene Biotechno

Anhui Huaheng Biotec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Huaheng Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shanghai Rightongene

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Anhui Huaheng and Shanghai Rightongene

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

The idea behind Anhui Huaheng Biotechnology and Shanghai Rightongene Biotechnology 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 Commodity Directory module to find actively traded commodities issued by global exchanges.