Correlation Between Chenzhou Jingui and Guangzhou Fangbang

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Chenzhou Jingui and Guangzhou Fangbang 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 Chenzhou Jingui and Guangzhou Fangbang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chenzhou Jingui Silver and Guangzhou Fangbang Electronics, you can compare the effects of market volatilities on Chenzhou Jingui and Guangzhou Fangbang 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 Chenzhou Jingui with a short position of Guangzhou Fangbang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenzhou Jingui and Guangzhou Fangbang.

Diversification Opportunities for Chenzhou Jingui and Guangzhou Fangbang

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Chenzhou and Guangzhou is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chenzhou Jingui Silver and Guangzhou Fangbang Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Fangbang and Chenzhou Jingui 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 Chenzhou Jingui Silver are associated (or correlated) with Guangzhou Fangbang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Fangbang has no effect on the direction of Chenzhou Jingui i.e., Chenzhou Jingui and Guangzhou Fangbang go up and down completely randomly.

Pair Corralation between Chenzhou Jingui and Guangzhou Fangbang

Assuming the 90 days trading horizon Chenzhou Jingui Silver is expected to under-perform the Guangzhou Fangbang. In addition to that, Chenzhou Jingui is 1.1 times more volatile than Guangzhou Fangbang Electronics. It trades about -0.08 of its total potential returns per unit of risk. Guangzhou Fangbang Electronics is currently generating about 0.01 per unit of volatility. If you would invest  3,768  in Guangzhou Fangbang Electronics on October 1, 2024 and sell it today you would lose (1.00) from holding Guangzhou Fangbang Electronics or give up 0.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Chenzhou Jingui Silver  vs.  Guangzhou Fangbang Electronics

 Performance 
       Timeline  
Chenzhou Jingui Silver 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Chenzhou Jingui Silver are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Chenzhou Jingui is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Guangzhou Fangbang 

Risk-Adjusted Performance

0 of 100

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

Chenzhou Jingui and Guangzhou Fangbang Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chenzhou Jingui and Guangzhou Fangbang

The main advantage of trading using opposite Chenzhou Jingui and Guangzhou Fangbang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chenzhou Jingui position performs unexpectedly, Guangzhou Fangbang 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 Guangzhou Fangbang will offset losses from the drop in Guangzhou Fangbang's long position.
The idea behind Chenzhou Jingui Silver and Guangzhou Fangbang Electronics 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.
Check out your portfolio center.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

Other Complementary Tools

Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios