Correlation Between RETAIL FOOD and CHINA EAST

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

By analyzing existing cross correlation between RETAIL FOOD GROUP and CHINA EAST ED, you can compare the effects of market volatilities on RETAIL FOOD and CHINA EAST 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 RETAIL FOOD with a short position of CHINA EAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and CHINA EAST.

Diversification Opportunities for RETAIL FOOD and CHINA EAST

-0.4

Correlation Coefficient

RETAIL FOOD  CHINA EAST

Very good diversification

The 3 months correlation between RETAIL and CHINA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and CHINA EAST ED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EAST ED and RETAIL FOOD 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 RETAIL FOOD GROUP are associated (or correlated) with CHINA EAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EAST ED has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and CHINA EAST go up and down completely randomly.

Pair Corralation between RETAIL FOOD and CHINA EAST

Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the CHINA EAST. In addition to that, RETAIL FOOD is 1.17 times more volatile than CHINA EAST ED. It trades about -0.18 of its total potential returns per unit of risk. CHINA EAST ED is currently generating about 0.23 per unit of volatility. If you would invest  32.00  in CHINA EAST ED on December 20, 2024 and sell it today you would earn a total of  16.00  from holding CHINA EAST ED or generate 50.0% return on investment over 90 days.

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

RETAIL FOOD GROUP  vs.  CHINA EAST ED

RETAIL FOOD GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days RETAIL FOOD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CHINA EAST ED

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA EAST ED are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA EAST reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RETAIL FOOD and CHINA EAST

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

The idea behind RETAIL FOOD GROUP and CHINA EAST ED 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.