Correlation Between Algorand and China Sanjiang

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

By analyzing existing cross correlation between Algorand and China Sanjiang Fine, you can compare the effects of market volatilities on Algorand and China Sanjiang 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 Algorand with a short position of China Sanjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and China Sanjiang.

Diversification Opportunities for Algorand and China Sanjiang

0.32

Correlation Coefficient

Algorand  China Sanjiang

Weak diversification

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

Pair Corralation between Algorand and China Sanjiang

Assuming the 90 days trading horizon Algorand is expected to under-perform the China Sanjiang. In addition to that, Algorand is 2.68 times more volatile than China Sanjiang Fine. It trades about -0.02 of its total potential returns per unit of risk. China Sanjiang Fine is currently generating about 0.01 per unit of volatility. If you would invest  19.00  in China Sanjiang Fine on October 9, 2024 and sell it today you would earn a total of  0.00  from holding China Sanjiang Fine or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

Algorand  vs.  China Sanjiang Fine

Algorand

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Algorand exhibited solid returns over the last few months and may actually be approaching a breakup point.

China Sanjiang Fine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Sanjiang Fine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, China Sanjiang may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Algorand and China Sanjiang

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

The idea behind Algorand and China Sanjiang Fine 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..