Correlation Between Hongkong and Anhui Conch

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

By analyzing existing cross correlation between The Hongkong and and Anhui Conch Cement, you can compare the effects of market volatilities on Hongkong and Anhui Conch 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 Hongkong with a short position of Anhui Conch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongkong and Anhui Conch.

Diversification Opportunities for Hongkong and Anhui Conch

-0.62

Correlation Coefficient

Hongkong  Anhui Conch

Excellent diversification

The 3 months correlation between Hongkong and Anhui is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Hongkong and and Anhui Conch Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Conch Cement and Hongkong 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 The Hongkong and are associated (or correlated) with Anhui Conch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Conch Cement has no effect on the direction of Hongkong i.e., Hongkong and Anhui Conch go up and down completely randomly.

Pair Corralation between Hongkong and Anhui Conch

Assuming the 90 days horizon The Hongkong and is expected to under-perform the Anhui Conch. But the stock apears to be less risky and, when comparing its historical volatility, The Hongkong and is 1.9 times less risky than Anhui Conch. The stock trades about -0.2 of its potential returns per unit of risk. The Anhui Conch Cement is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  239.00  in Anhui Conch Cement on October 27, 2024 and sell it today you would earn a total of  9.00  from holding Anhui Conch Cement or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

The Hongkong and  vs.  Anhui Conch Cement

The Hongkong

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hongkong and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hongkong may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Anhui Conch Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Conch Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Anhui Conch is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hongkong and Anhui Conch

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

The idea behind The Hongkong and and Anhui Conch Cement 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.