Correlation Between Guangzhou Haozhi and AUPU Home

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Can any of the company-specific risk be diversified away by investing in both Guangzhou Haozhi and AUPU Home 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 Guangzhou Haozhi and AUPU Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangzhou Haozhi Industrial and AUPU Home Style, you can compare the effects of market volatilities on Guangzhou Haozhi and AUPU Home 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 Guangzhou Haozhi with a short position of AUPU Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Haozhi and AUPU Home.

Diversification Opportunities for Guangzhou Haozhi and AUPU Home

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Guangzhou and AUPU is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Haozhi Industrial and AUPU Home Style in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUPU Home Style and Guangzhou Haozhi 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 Guangzhou Haozhi Industrial are associated (or correlated) with AUPU Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUPU Home Style has no effect on the direction of Guangzhou Haozhi i.e., Guangzhou Haozhi and AUPU Home go up and down completely randomly.

Pair Corralation between Guangzhou Haozhi and AUPU Home

Assuming the 90 days trading horizon Guangzhou Haozhi Industrial is expected to under-perform the AUPU Home. In addition to that, Guangzhou Haozhi is 2.28 times more volatile than AUPU Home Style. It trades about -0.25 of its total potential returns per unit of risk. AUPU Home Style is currently generating about -0.4 per unit of volatility. If you would invest  1,165  in AUPU Home Style on October 14, 2024 and sell it today you would lose (154.00) from holding AUPU Home Style or give up 13.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Guangzhou Haozhi Industrial  vs.  AUPU Home Style

 Performance 
       Timeline  
Guangzhou Haozhi Ind 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Haozhi Industrial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Haozhi sustained solid returns over the last few months and may actually be approaching a breakup point.
AUPU Home Style 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AUPU Home Style has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AUPU Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guangzhou Haozhi and AUPU Home Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guangzhou Haozhi and AUPU Home

The main advantage of trading using opposite Guangzhou Haozhi and AUPU Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Haozhi position performs unexpectedly, AUPU Home 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 AUPU Home will offset losses from the drop in AUPU Home's long position.
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The idea behind Guangzhou Haozhi Industrial and AUPU Home Style 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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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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