Correlation Between Anhui Xinlong and Shanghai Lujiazui

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

Diversification Opportunities for Anhui Xinlong and Shanghai Lujiazui

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Anhui and Shanghai is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Xinlong Electrical and Shanghai Lujiazui Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Lujiazui Finance and Anhui Xinlong 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 Xinlong Electrical are associated (or correlated) with Shanghai Lujiazui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Lujiazui Finance has no effect on the direction of Anhui Xinlong i.e., Anhui Xinlong and Shanghai Lujiazui go up and down completely randomly.

Pair Corralation between Anhui Xinlong and Shanghai Lujiazui

Assuming the 90 days trading horizon Anhui Xinlong Electrical is expected to generate 4.72 times more return on investment than Shanghai Lujiazui. However, Anhui Xinlong is 4.72 times more volatile than Shanghai Lujiazui Finance. It trades about -0.01 of its potential returns per unit of risk. Shanghai Lujiazui Finance is currently generating about -0.15 per unit of risk. If you would invest  1,205  in Anhui Xinlong Electrical on August 27, 2025 and sell it today you would lose (102.00) from holding Anhui Xinlong Electrical or give up 8.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Anhui Xinlong Electrical  vs.  Shanghai Lujiazui Finance

 Performance 
       Timeline  
Anhui Xinlong Electrical 

Risk-Adjusted Performance

Weakest

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

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Shanghai Lujiazui Finance 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.

Anhui Xinlong and Shanghai Lujiazui Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Anhui Xinlong and Shanghai Lujiazui

The main advantage of trading using opposite Anhui Xinlong and Shanghai Lujiazui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Xinlong position performs unexpectedly, Shanghai Lujiazui 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 Shanghai Lujiazui will offset losses from the drop in Shanghai Lujiazui's long position.
The idea behind Anhui Xinlong Electrical and Shanghai Lujiazui Finance 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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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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