Correlation Between Jiahe Foods and Guangxi Wuzhou

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

By analyzing existing cross correlation between Jiahe Foods Industry and Guangxi Wuzhou Communications, you can compare the effects of market volatilities on Jiahe Foods and Guangxi Wuzhou 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 Jiahe Foods with a short position of Guangxi Wuzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiahe Foods and Guangxi Wuzhou.

Diversification Opportunities for Jiahe Foods and Guangxi Wuzhou

0.51

Correlation Coefficient

Jiahe Foods  Guangxi Wuzhou

Very weak diversification

The 3 months correlation between Jiahe and Guangxi is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Jiahe Foods Industry and Guangxi Wuzhou Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangxi Wuzhou Commu and Jiahe Foods 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 Jiahe Foods Industry are associated (or correlated) with Guangxi Wuzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangxi Wuzhou Commu has no effect on the direction of Jiahe Foods i.e., Jiahe Foods and Guangxi Wuzhou go up and down completely randomly.

Pair Corralation between Jiahe Foods and Guangxi Wuzhou

Assuming the 90 days trading horizon Jiahe Foods is expected to generate 2.47 times less return on investment than Guangxi Wuzhou. In addition to that, Jiahe Foods is 1.19 times more volatile than Guangxi Wuzhou Communications. It trades about 0.09 of its total potential returns per unit of risk. Guangxi Wuzhou Communications is currently generating about 0.25 per unit of volatility. If you would invest  361.00  in Guangxi Wuzhou Communications on September 27, 2024 and sell it today you would earn a total of  209.00  from holding Guangxi Wuzhou Communications or generate 57.89% return on investment over 90 days.

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

Jiahe Foods Industry  vs.  Guangxi Wuzhou Communications

Jiahe Foods Industry

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jiahe Foods Industry are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiahe Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangxi Wuzhou Commu

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangxi Wuzhou Communications are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangxi Wuzhou sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiahe Foods and Guangxi Wuzhou

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

The idea behind Jiahe Foods Industry and Guangxi Wuzhou Communications 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.