Correlation Between Eshallgo and China New

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

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

Diversification Opportunities for Eshallgo and China New

0.36

Correlation Coefficient

Eshallgo  China New

Weak diversification

The 3 months correlation between Eshallgo and China is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eshallgo Class A and China New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China New Energy and Eshallgo 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 Eshallgo Class A are associated (or correlated) with China New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China New Energy has no effect on the direction of Eshallgo i.e., Eshallgo and China New go up and down completely randomly.

Pair Corralation between Eshallgo and China New

Given the investment horizon of 90 days Eshallgo Class A is expected to under-perform the China New. But the stock apears to be less risky and, when comparing its historical volatility, Eshallgo Class A is 2.72 times less risky than China New. The stock trades about -0.03 of its potential returns per unit of risk. The China New Energy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.30  in China New Energy on October 27, 2024 and sell it today you would earn a total of  0.20  from holding China New Energy or generate 66.67% return on investment over 90 days.

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

Eshallgo Class A  vs.  China New Energy

Eshallgo Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eshallgo Class A 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

China New Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China New Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, China New reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eshallgo and China New

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

The idea behind Eshallgo Class A and China New Energy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.