Correlation Between Wuhan General and AptarGroup

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

By analyzing existing cross correlation between Wuhan General Gr and AptarGroup, you can compare the effects of market volatilities on Wuhan General and AptarGroup 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 Wuhan General with a short position of AptarGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan General and AptarGroup.

Diversification Opportunities for Wuhan General and AptarGroup

-0.54

Correlation Coefficient

Wuhan General  AptarGroup

Excellent diversification

The 3 months correlation between Wuhan and AptarGroup is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan General Gr and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and Wuhan General 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 Wuhan General Gr are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Wuhan General i.e., Wuhan General and AptarGroup go up and down completely randomly.

Pair Corralation between Wuhan General and AptarGroup

If you would invest  0.04  in Wuhan General Gr on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Wuhan General Gr or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Wuhan General Gr  vs.  AptarGroup

Wuhan General Gr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wuhan General Gr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Wuhan General is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

AptarGroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AptarGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, AptarGroup is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wuhan General and AptarGroup

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

The idea behind Wuhan General Gr and AptarGroup 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.