Correlation Between Hong Yuan and GIB Capital

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

By analyzing existing cross correlation between Hong Yuan Holding and GIB Capital Group, you can compare the effects of market volatilities on Hong Yuan and GIB Capital 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 Hong Yuan with a short position of GIB Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Yuan and GIB Capital.

Diversification Opportunities for Hong Yuan and GIB Capital

0.31

Correlation Coefficient

Hong Yuan  GIB Capital

Weak diversification

The 3 months correlation between Hong and GIB is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hong Yuan Holding and GIB Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIB Capital Group and Hong Yuan 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 Hong Yuan Holding are associated (or correlated) with GIB Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIB Capital Group has no effect on the direction of Hong Yuan i.e., Hong Yuan and GIB Capital go up and down completely randomly.

Pair Corralation between Hong Yuan and GIB Capital

Given the investment horizon of 90 days Hong Yuan Holding is expected to generate 3.39 times more return on investment than GIB Capital. However, Hong Yuan is 3.39 times more volatile than GIB Capital Group. It trades about 0.19 of its potential returns per unit of risk. GIB Capital Group is currently generating about -0.13 per unit of risk. If you would invest  2.60  in Hong Yuan Holding on December 19, 2024 and sell it today you would earn a total of  2.19  from holding Hong Yuan Holding or generate 84.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Hong Yuan Holding  vs.  GIB Capital Group

Hong Yuan Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hong Yuan Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Hong Yuan displayed solid returns over the last few months and may actually be approaching a breakup point.

GIB Capital Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days GIB Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hong Yuan and GIB Capital

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

The idea behind Hong Yuan Holding and GIB Capital Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.