Correlation Between Gushen and China Food

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

By analyzing existing cross correlation between Gushen Inc and China Food and, you can compare the effects of market volatilities on Gushen and China Food 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 Gushen with a short position of China Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gushen and China Food.

Diversification Opportunities for Gushen and China Food

-0.51

Correlation Coefficient

Gushen  China Food

Excellent diversification

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

Pair Corralation between Gushen and China Food

If you would invest  1.98  in China Food and on September 24, 2024 and sell it today you would lose (0.24) from holding China Food and or give up 12.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Gushen Inc  vs.  China Food and

Gushen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gushen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Gushen is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

China Food

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Food and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, China Food reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gushen and China Food

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

The idea behind Gushen Inc and China Food and 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.