Correlation Between Anhui Gujing and Ziel Home

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

By analyzing existing cross correlation between Anhui Gujing Distillery and Ziel Home Furnishing, you can compare the effects of market volatilities on Anhui Gujing and Ziel Home 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 Anhui Gujing with a short position of Ziel Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Gujing and Ziel Home.

Diversification Opportunities for Anhui Gujing and Ziel Home

0.62

Correlation Coefficient

Anhui Gujing  Ziel Home

Poor diversification

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

Pair Corralation between Anhui Gujing and Ziel Home

Assuming the 90 days trading horizon Anhui Gujing Distillery is expected to under-perform the Ziel Home. But the stock apears to be less risky and, when comparing its historical volatility, Anhui Gujing Distillery is 1.08 times less risky than Ziel Home. The stock trades about -0.01 of its potential returns per unit of risk. The Ziel Home Furnishing is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,834  in Ziel Home Furnishing on September 27, 2024 and sell it today you would earn a total of  138.00  from holding Ziel Home Furnishing or generate 7.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Anhui Gujing Distillery  vs.  Ziel Home Furnishing

Anhui Gujing Distillery

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ziel Home Furnishing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ziel Home Furnishing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ziel Home may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Anhui Gujing and Ziel Home

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

The idea behind Anhui Gujing Distillery and Ziel Home Furnishing 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.