Correlation Between Durect and Wuhan General

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

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

Diversification Opportunities for Durect and Wuhan General

0.7

Correlation Coefficient

Durect  Wuhan General

Poor diversification

The 3 months correlation between Durect and Wuhan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Durect and Wuhan General Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuhan General Gr and Durect 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 Durect are associated (or correlated) with Wuhan General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuhan General Gr has no effect on the direction of Durect i.e., Durect and Wuhan General go up and down completely randomly.

Pair Corralation between Durect and Wuhan General

If you would invest  0.04  in Wuhan General Gr on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Wuhan General Gr or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	2.41%
Values	Daily Returns

Durect  vs.  Wuhan General Gr

Durect

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Durect has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly 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.

Wuhan General Gr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wuhan General Gr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Wuhan General is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Durect and Wuhan General

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

The idea behind Durect and Wuhan General Gr 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.