Correlation Between CHINA GAS and China Gas

By analyzing existing cross correlation between CHINA GAS HOLDINGS and China Gas Hlds, you can compare the effects of market volatilities on CHINA GAS and China Gas 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 CHINA GAS with a short position of China Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA GAS and China Gas.

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Can any of the company-specific risk be diversified away by investing in both CHINA GAS and China Gas 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 CHINA GAS and China Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for CHINA GAS and China Gas

0.39
  Correlation Coefficient
CHINA GAS HOLDINGS
China Gas Hlds

Weak diversification

The 3 months correlation between CHINA and China is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CHINA GAS HOLDINGS and China Gas Hlds in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on China Gas Hlds and CHINA GAS 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 CHINA GAS HOLDINGS are associated (or correlated) with China Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gas Hlds has no effect on the direction of CHINA GAS i.e., CHINA GAS and China Gas go up and down completely randomly.

Pair Corralation between CHINA GAS and China Gas

Assuming the 90 days horizon CHINA GAS HOLDINGS is expected to generate 1.29 times more return on investment than China Gas. However, CHINA GAS is 1.29 times more volatile than China Gas Hlds. It trades about 0.0 of its potential returns per unit of risk. China Gas Hlds is currently generating about 0.0 per unit of risk. If you would invest  9,709  in CHINA GAS HOLDINGS on May 5, 2021 and sell it today you would lose (1,709)  from holding CHINA GAS HOLDINGS or give up 17.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.79%
ValuesDaily Returns

CHINA GAS HOLDINGS  vs.  China Gas Hlds

 Performance (%) 
      Timeline 
CHINA GAS HOLDINGS 
 CHINA Performance
0 of 100
Over the last 90 days CHINA GAS HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CHINA Price Channel

China Gas Hlds 
 China Performance
0 of 100
Over the last 90 days China Gas Hlds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2021. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

China Price Channel

CHINA GAS and China Gas Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with CHINA GAS and China Gas

The main advantage of trading using opposite CHINA GAS and China Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA GAS position performs unexpectedly, China Gas 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 China Gas will offset losses from the drop in China Gas' long position.
The idea behind CHINA GAS HOLDINGS and China Gas Hlds 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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