Correlation Between Hai An and Investment

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

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

Diversification Opportunities for Hai An and Investment

-0.45

Correlation Coefficient

Hai An  Investment

Very good diversification

The 3 months correlation between Hai and Investment is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and Investment and Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment and Industrial and Hai An 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 Hai An Transport are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment and Industrial has no effect on the direction of Hai An i.e., Hai An and Investment go up and down completely randomly.

Pair Corralation between Hai An and Investment

Assuming the 90 days trading horizon Hai An Transport is expected to generate 1.38 times more return on investment than Investment. However, Hai An is 1.38 times more volatile than Investment and Industrial. It trades about 0.22 of its potential returns per unit of risk. Investment and Industrial is currently generating about -0.02 per unit of risk. If you would invest  3,900,000  in Hai An Transport on September 15, 2024 and sell it today you would earn a total of  1,040,000  from holding Hai An Transport or generate 26.67% return on investment over 90 days.

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

Hai An Transport  vs.  Investment and Industrial

Hai An Transport

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hai An Transport are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Hai An displayed solid returns over the last few months and may actually be approaching a breakup point.

Investment and Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hai An and Investment

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

The idea behind Hai An Transport and Investment and Industrial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.