Correlation Between Chongqing Brewery and Gan Yuan
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By analyzing existing cross correlation between Chongqing Brewery Co and Gan Yuan Foods, you can compare the effects of market volatilities on Chongqing Brewery and Gan Yuan 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 Chongqing Brewery with a short position of Gan Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Brewery and Gan Yuan.
Diversification Opportunities for Chongqing Brewery and Gan Yuan
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chongqing and Gan is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Brewery Co and Gan Yuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Yuan Foods and Chongqing Brewery 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 Chongqing Brewery Co are associated (or correlated) with Gan Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Yuan Foods has no effect on the direction of Chongqing Brewery i.e., Chongqing Brewery and Gan Yuan go up and down completely randomly.
Pair Corralation between Chongqing Brewery and Gan Yuan
Assuming the 90 days trading horizon Chongqing Brewery Co is expected to under-perform the Gan Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Brewery Co is 2.3 times less risky than Gan Yuan. The stock trades about -0.3 of its potential returns per unit of risk. The Gan Yuan Foods is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 8,750 in Gan Yuan Foods on November 8, 2024 and sell it today you would lose (620.00) from holding Gan Yuan Foods or give up 7.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Brewery Co vs. Gan Yuan Foods
Performance |
| Timeline |
| Chongqing Brewery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Gan Yuan Foods |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Chongqing Brewery and Gan Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Brewery and Gan Yuan
The main advantage of trading using opposite Chongqing Brewery and Gan Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Brewery position performs unexpectedly, Gan Yuan 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 Gan Yuan will offset losses from the drop in Gan Yuan's long position.The idea behind Chongqing Brewery Co and Gan Yuan Foods 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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