Correlation Between Guangzhou Dongfang and BrightGene Bio
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By analyzing existing cross correlation between Guangzhou Dongfang Hotel and BrightGene Bio Medical, you can compare the effects of market volatilities on Guangzhou Dongfang and BrightGene Bio 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 BrightGene Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Dongfang and BrightGene Bio.
Diversification Opportunities for Guangzhou Dongfang and BrightGene Bio
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangzhou and BrightGene is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Dongfang Hotel and BrightGene Bio Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightGene Bio Medical 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 BrightGene Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightGene Bio Medical has no effect on the direction of Guangzhou Dongfang i.e., Guangzhou Dongfang and BrightGene Bio go up and down completely randomly.
Pair Corralation between Guangzhou Dongfang and BrightGene Bio
Assuming the 90 days trading horizon Guangzhou Dongfang Hotel is expected to generate 0.86 times more return on investment than BrightGene Bio. However, Guangzhou Dongfang Hotel is 1.16 times less risky than BrightGene Bio. It trades about 0.16 of its potential returns per unit of risk. BrightGene Bio Medical is currently generating about 0.08 per unit of risk. If you would invest 902.00 in Guangzhou Dongfang Hotel on November 7, 2024 and sell it today you would earn a total of 43.00 from holding Guangzhou Dongfang Hotel or generate 4.77% 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. BrightGene Bio Medical
Performance |
| Timeline |
| Guangzhou Dongfang Hotel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BrightGene Bio Medical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Guangzhou Dongfang and BrightGene Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Dongfang and BrightGene Bio
The main advantage of trading using opposite Guangzhou Dongfang and BrightGene Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Dongfang position performs unexpectedly, BrightGene Bio 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 BrightGene Bio will offset losses from the drop in BrightGene Bio's long position.The idea behind Guangzhou Dongfang Hotel and BrightGene Bio Medical 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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