Correlation Between Servyou Software and Gansu Jiu

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

By analyzing existing cross correlation between Servyou Software Group and Gansu Jiu Steel, you can compare the effects of market volatilities on Servyou Software and Gansu Jiu 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 Servyou Software with a short position of Gansu Jiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Servyou Software and Gansu Jiu.

Diversification Opportunities for Servyou Software and Gansu Jiu

0.82

Correlation Coefficient

Servyou Software  Gansu Jiu

Very poor diversification

The 3 months correlation between Servyou and Gansu is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Servyou Software Group and Gansu Jiu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Jiu Steel and Servyou Software 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 Servyou Software Group are associated (or correlated) with Gansu Jiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Jiu Steel has no effect on the direction of Servyou Software i.e., Servyou Software and Gansu Jiu go up and down completely randomly.

Pair Corralation between Servyou Software and Gansu Jiu

Assuming the 90 days trading horizon Servyou Software Group is expected to generate 0.98 times more return on investment than Gansu Jiu. However, Servyou Software Group is 1.02 times less risky than Gansu Jiu. It trades about 0.21 of its potential returns per unit of risk. Gansu Jiu Steel is currently generating about 0.2 per unit of risk. If you would invest  2,266  in Servyou Software Group on September 13, 2024 and sell it today you would earn a total of  1,231  from holding Servyou Software Group or generate 54.32% return on investment over 90 days.

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

Servyou Software Group  vs.  Gansu Jiu Steel

Servyou Software

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Servyou Software Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Servyou Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Gansu Jiu Steel

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Jiu Steel are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gansu Jiu sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Servyou Software and Gansu Jiu

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

The idea behind Servyou Software Group and Gansu Jiu Steel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.