Correlation Between Anhui Estone and Allwin Telecommunicatio

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

By analyzing existing cross correlation between Anhui Estone Materials and Allwin Telecommunication Co, you can compare the effects of market volatilities on Anhui Estone and Allwin Telecommunicatio 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 Estone with a short position of Allwin Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Estone and Allwin Telecommunicatio.

Diversification Opportunities for Anhui Estone and Allwin Telecommunicatio

0.6

Correlation Coefficient

Anhui Estone  Allwin Telecommunicatio

Poor diversification

The 3 months correlation between Anhui and Allwin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Estone Materials and Allwin Telecommunication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allwin Telecommunicatio and Anhui Estone 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 Estone Materials are associated (or correlated) with Allwin Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allwin Telecommunicatio has no effect on the direction of Anhui Estone i.e., Anhui Estone and Allwin Telecommunicatio go up and down completely randomly.

Pair Corralation between Anhui Estone and Allwin Telecommunicatio

Assuming the 90 days trading horizon Anhui Estone Materials is expected to under-perform the Allwin Telecommunicatio. In addition to that, Anhui Estone is 1.02 times more volatile than Allwin Telecommunication Co. It trades about -0.02 of its total potential returns per unit of risk. Allwin Telecommunication Co is currently generating about -0.01 per unit of volatility. If you would invest  820.00  in Allwin Telecommunication Co on October 11, 2024 and sell it today you would lose (285.00) from holding Allwin Telecommunication Co or give up 34.76% of portfolio value over 90 days.

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

Anhui Estone Materials  vs.  Allwin Telecommunication Co

Anhui Estone Materials

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Estone Materials are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Estone sustained solid returns over the last few months and may actually be approaching a breakup point.

Allwin Telecommunicatio

Risk-Adjusted Performance

2 of 100

Very Weak

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

Pair Trading with Anhui Estone and Allwin Telecommunicatio

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

The idea behind Anhui Estone Materials and Allwin Telecommunication Co 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.