Correlation Between First Capital and Anhui Guofeng
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By analyzing existing cross correlation between First Capital Securities and Anhui Guofeng Plastic, you can compare the effects of market volatilities on First Capital and Anhui Guofeng 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 First Capital with a short position of Anhui Guofeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Anhui Guofeng.
Diversification Opportunities for First Capital and Anhui Guofeng
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Anhui is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Capital Securities and Anhui Guofeng Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Guofeng Plastic and First Capital 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 First Capital Securities are associated (or correlated) with Anhui Guofeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Guofeng Plastic has no effect on the direction of First Capital i.e., First Capital and Anhui Guofeng go up and down completely randomly.
Pair Corralation between First Capital and Anhui Guofeng
Assuming the 90 days trading horizon First Capital is expected to generate 1.58 times less return on investment than Anhui Guofeng. But when comparing it to its historical volatility, First Capital Securities is 1.19 times less risky than Anhui Guofeng. It trades about 0.15 of its potential returns per unit of risk. Anhui Guofeng Plastic is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 456.00 in Anhui Guofeng Plastic on November 7, 2024 and sell it today you would earn a total of 34.00 from holding Anhui Guofeng Plastic or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Capital Securities vs. Anhui Guofeng Plastic
Performance |
| Timeline |
| First Capital Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Anhui Guofeng Plastic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Capital and Anhui Guofeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and Anhui Guofeng
The main advantage of trading using opposite First Capital and Anhui Guofeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, Anhui Guofeng 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 Anhui Guofeng will offset losses from the drop in Anhui Guofeng's long position.The idea behind First Capital Securities and Anhui Guofeng Plastic 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.Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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