Correlation Between Puda Coal and CGA Old

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

By analyzing existing cross correlation between Puda Coal New and CGA Old, you can compare the effects of market volatilities on Puda Coal and CGA Old 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 Puda Coal with a short position of CGA Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puda Coal and CGA Old.

Diversification Opportunities for Puda Coal and CGA Old

0.0

Correlation Coefficient

Puda Coal  CGA Old

Pay attention - limited upside

The 3 months correlation between Puda and CGA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Puda Coal New and CGA Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGA Old and Puda Coal 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 Puda Coal New are associated (or correlated) with CGA Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGA Old has no effect on the direction of Puda Coal i.e., Puda Coal and CGA Old go up and down completely randomly.

Pair Corralation between Puda Coal and CGA Old

If you would invest  198.00  in CGA Old on October 27, 2024 and sell it today you would earn a total of  0.00  from holding CGA Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Puda Coal New  vs.  CGA Old

Puda Coal New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Puda Coal New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Puda Coal is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CGA Old

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days CGA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unfluctuating technical and fundamental indicators, CGA Old sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Puda Coal and CGA Old

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

The idea behind Puda Coal New and CGA Old 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.