Correlation Between Anhui Transport and Sinocelltech

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

By analyzing existing cross correlation between Anhui Transport Consulting and Sinocelltech Group, you can compare the effects of market volatilities on Anhui Transport and Sinocelltech 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 Transport with a short position of Sinocelltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Transport and Sinocelltech.

Diversification Opportunities for Anhui Transport and Sinocelltech

0.82

Correlation Coefficient

Anhui Transport  Sinocelltech

Very poor diversification

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

Pair Corralation between Anhui Transport and Sinocelltech

Assuming the 90 days trading horizon Anhui Transport Consulting is expected to generate 0.68 times more return on investment than Sinocelltech. However, Anhui Transport Consulting is 1.47 times less risky than Sinocelltech. It trades about 0.13 of its potential returns per unit of risk. Sinocelltech Group is currently generating about 0.07 per unit of risk. If you would invest  770.00  in Anhui Transport Consulting on September 19, 2024 and sell it today you would earn a total of  164.00  from holding Anhui Transport Consulting or generate 21.3% return on investment over 90 days.

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

Anhui Transport Consulting  vs.  Sinocelltech Group

Anhui Transport Cons

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Transport Consulting are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Transport sustained solid returns over the last few months and may actually be approaching a breakup point.

Sinocelltech Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sinocelltech Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinocelltech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Transport and Sinocelltech

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

The idea behind Anhui Transport Consulting and Sinocelltech Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..