Correlation Between Anhui Huaren and HanS Laser

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

Diversification Opportunities for Anhui Huaren and HanS Laser

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Anhui and HanS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Huaren Health and HanS Laser Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HanS Laser Tech and Anhui Huaren 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 Anhui Huaren Health are associated (or correlated) with HanS Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HanS Laser Tech has no effect on the direction of Anhui Huaren i.e., Anhui Huaren and HanS Laser go up and down completely randomly.

Pair Corralation between Anhui Huaren and HanS Laser

Assuming the 90 days trading horizon Anhui Huaren Health is expected to under-perform the HanS Laser. In addition to that, Anhui Huaren is 1.59 times more volatile than HanS Laser Tech. It trades about -0.23 of its total potential returns per unit of risk. HanS Laser Tech is currently generating about -0.23 per unit of volatility. If you would invest  2,710  in HanS Laser Tech on October 12, 2024 and sell it today you would lose (274.00) from holding HanS Laser Tech or give up 10.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Anhui Huaren Health  vs.  HanS Laser Tech

 Performance 
       Timeline  
Anhui Huaren Health 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Anhui Huaren Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
HanS Laser Tech 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in HanS Laser Tech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HanS Laser is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Anhui Huaren and HanS Laser Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Anhui Huaren and HanS Laser

The main advantage of trading using opposite Anhui Huaren and HanS Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Huaren position performs unexpectedly, HanS Laser 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 HanS Laser will offset losses from the drop in HanS Laser's long position.
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The idea behind Anhui Huaren Health and HanS Laser Tech 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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