Correlation Between Guangzhou Dongfang and China Satellite
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By analyzing existing cross correlation between Guangzhou Dongfang Hotel and China Satellite Communications, you can compare the effects of market volatilities on Guangzhou Dongfang and China Satellite 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 Guangzhou Dongfang with a short position of China Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Dongfang and China Satellite.
Diversification Opportunities for Guangzhou Dongfang and China Satellite
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangzhou and China is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Dongfang Hotel and China Satellite Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Satellite Comm and Guangzhou Dongfang 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 Guangzhou Dongfang Hotel are associated (or correlated) with China Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Satellite Comm has no effect on the direction of Guangzhou Dongfang i.e., Guangzhou Dongfang and China Satellite go up and down completely randomly.
Pair Corralation between Guangzhou Dongfang and China Satellite
Assuming the 90 days trading horizon Guangzhou Dongfang is expected to generate 5.05 times less return on investment than China Satellite. But when comparing it to its historical volatility, Guangzhou Dongfang Hotel is 3.55 times less risky than China Satellite. It trades about 0.18 of its potential returns per unit of risk. China Satellite Communications is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,690 in China Satellite Communications on September 4, 2024 and sell it today you would earn a total of 610.00 from holding China Satellite Communications or generate 36.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Dongfang Hotel vs. China Satellite Communications
Performance |
| Timeline |
| Guangzhou Dongfang Hotel |
| China Satellite Comm |
Guangzhou Dongfang and China Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Dongfang and China Satellite
The main advantage of trading using opposite Guangzhou Dongfang and China Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Dongfang position performs unexpectedly, China Satellite 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 Satellite will offset losses from the drop in China Satellite's long position.| Guangzhou Dongfang vs. Biwin Storage Technology | Guangzhou Dongfang vs. PetroChina Co Ltd | Guangzhou Dongfang vs. Industrial and Commercial | Guangzhou Dongfang vs. China Construction Bank |
| China Satellite vs. New China Life | China Satellite vs. Ming Yang Smart | China Satellite vs. 159681 | China Satellite vs. 159005 |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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