Correlation Between Hubei Yingtong and Zhejiang Qianjiang

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

By analyzing existing cross correlation between Hubei Yingtong Telecommunication and Zhejiang Qianjiang Motorcycle, you can compare the effects of market volatilities on Hubei Yingtong and Zhejiang Qianjiang 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 Hubei Yingtong with a short position of Zhejiang Qianjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Yingtong and Zhejiang Qianjiang.

Diversification Opportunities for Hubei Yingtong and Zhejiang Qianjiang

0.43

Correlation Coefficient

Hubei Yingtong  Zhejiang Qianjiang

Very weak diversification

The 3 months correlation between Hubei and Zhejiang is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Yingtong Telecommunicati and Zhejiang Qianjiang Motorcycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Qianjiang and Hubei Yingtong 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 Hubei Yingtong Telecommunication are associated (or correlated) with Zhejiang Qianjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Qianjiang has no effect on the direction of Hubei Yingtong i.e., Hubei Yingtong and Zhejiang Qianjiang go up and down completely randomly.

Pair Corralation between Hubei Yingtong and Zhejiang Qianjiang

Assuming the 90 days trading horizon Hubei Yingtong is expected to generate 1.61 times less return on investment than Zhejiang Qianjiang. In addition to that, Hubei Yingtong is 1.38 times more volatile than Zhejiang Qianjiang Motorcycle. It trades about 0.02 of its total potential returns per unit of risk. Zhejiang Qianjiang Motorcycle is currently generating about 0.04 per unit of volatility. If you would invest  1,745  in Zhejiang Qianjiang Motorcycle on September 27, 2024 and sell it today you would earn a total of  68.00  from holding Zhejiang Qianjiang Motorcycle or generate 3.9% return on investment over 90 days.

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

Hubei Yingtong Telecommunicati  vs.  Zhejiang Qianjiang Motorcycle

Hubei Yingtong Telec

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Yingtong Telecommunication are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hubei Yingtong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhejiang Qianjiang

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Qianjiang Motorcycle are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang Qianjiang may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hubei Yingtong and Zhejiang Qianjiang

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

The idea behind Hubei Yingtong Telecommunication and Zhejiang Qianjiang Motorcycle 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.