Correlation Between Heilongjiang Transport and Focus Media

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Heilongjiang Transport and Focus Media 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 Heilongjiang Transport and Focus Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heilongjiang Transport Development and Focus Media Information, you can compare the effects of market volatilities on Heilongjiang Transport and Focus Media 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 Heilongjiang Transport with a short position of Focus Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Transport and Focus Media.

Diversification Opportunities for Heilongjiang Transport and Focus Media

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Heilongjiang and Focus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Transport Develop and Focus Media Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Media Information and Heilongjiang Transport 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 Heilongjiang Transport Development are associated (or correlated) with Focus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Media Information has no effect on the direction of Heilongjiang Transport i.e., Heilongjiang Transport and Focus Media go up and down completely randomly.

Pair Corralation between Heilongjiang Transport and Focus Media

Assuming the 90 days trading horizon Heilongjiang Transport Development is expected to generate 1.57 times more return on investment than Focus Media. However, Heilongjiang Transport is 1.57 times more volatile than Focus Media Information. It trades about 0.02 of its potential returns per unit of risk. Focus Media Information is currently generating about 0.01 per unit of risk. If you would invest  306.00  in Heilongjiang Transport Development on October 16, 2024 and sell it today you would earn a total of  21.00  from holding Heilongjiang Transport Development or generate 6.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Heilongjiang Transport Develop  vs.  Focus Media Information

 Performance 
       Timeline  
Heilongjiang Transport 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Focus Media Information 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.

Heilongjiang Transport and Focus Media Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Heilongjiang Transport and Focus Media

The main advantage of trading using opposite Heilongjiang Transport and Focus Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heilongjiang Transport position performs unexpectedly, Focus Media 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 Focus Media will offset losses from the drop in Focus Media's long position.
The idea behind Heilongjiang Transport Development and Focus Media Information 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

Other Complementary Tools

Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios