Correlation Between Yunnan Chuangxin and Yunnan Chihong

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

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

Diversification Opportunities for Yunnan Chuangxin and Yunnan Chihong

0.78

Correlation Coefficient

Yunnan Chuangxin  Yunnan Chihong

Poor diversification

The 3 months correlation between Yunnan and Yunnan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Chuangxin New and Yunnan Chihong ZincGermanium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Chihong ZincG and Yunnan Chuangxin 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 Yunnan Chuangxin New are associated (or correlated) with Yunnan Chihong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Chihong ZincG has no effect on the direction of Yunnan Chuangxin i.e., Yunnan Chuangxin and Yunnan Chihong go up and down completely randomly.

Pair Corralation between Yunnan Chuangxin and Yunnan Chihong

Assuming the 90 days trading horizon Yunnan Chuangxin New is expected to under-perform the Yunnan Chihong. In addition to that, Yunnan Chuangxin is 1.17 times more volatile than Yunnan Chihong ZincGermanium. It trades about -0.39 of its total potential returns per unit of risk. Yunnan Chihong ZincGermanium is currently generating about 0.0 per unit of volatility. If you would invest  572.00  in Yunnan Chihong ZincGermanium on September 27, 2024 and sell it today you would lose (1.00) from holding Yunnan Chihong ZincGermanium or give up 0.17% of portfolio value over 90 days.

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

Yunnan Chuangxin New  vs.  Yunnan Chihong ZincGermanium

Yunnan Chuangxin New

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Chuangxin New are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yunnan Chuangxin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yunnan Chihong ZincG

Risk-Adjusted Performance

4 of 100

OK

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

Pair Trading with Yunnan Chuangxin and Yunnan Chihong

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

The idea behind Yunnan Chuangxin New and Yunnan Chihong ZincGermanium 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.