Correlation Between Advanced Technology and Guangzhou Tinci
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By analyzing existing cross correlation between Advanced Technology Materials and Guangzhou Tinci Materials, you can compare the effects of market volatilities on Advanced Technology and Guangzhou Tinci 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 Advanced Technology with a short position of Guangzhou Tinci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Technology and Guangzhou Tinci.
Diversification Opportunities for Advanced Technology and Guangzhou Tinci
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Advanced and Guangzhou is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Technology Materials and Guangzhou Tinci Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Tinci Materials and Advanced Technology 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 Advanced Technology Materials are associated (or correlated) with Guangzhou Tinci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Tinci Materials has no effect on the direction of Advanced Technology i.e., Advanced Technology and Guangzhou Tinci go up and down completely randomly.
Pair Corralation between Advanced Technology and Guangzhou Tinci
Assuming the 90 days trading horizon Advanced Technology Materials is expected to generate 0.72 times more return on investment than Guangzhou Tinci. However, Advanced Technology Materials is 1.39 times less risky than Guangzhou Tinci. It trades about 0.12 of its potential returns per unit of risk. Guangzhou Tinci Materials is currently generating about 0.07 per unit of risk. If you would invest 846.00 in Advanced Technology Materials on September 1, 2024 and sell it today you would earn a total of 375.00 from holding Advanced Technology Materials or generate 44.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Technology Materials vs. Guangzhou Tinci Materials
Performance |
| Timeline |
| Advanced Technology |
| Guangzhou Tinci Materials |
Advanced Technology and Guangzhou Tinci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Technology and Guangzhou Tinci
The main advantage of trading using opposite Advanced Technology and Guangzhou Tinci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Technology position performs unexpectedly, Guangzhou Tinci 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 Guangzhou Tinci will offset losses from the drop in Guangzhou Tinci's long position.The idea behind Advanced Technology Materials and Guangzhou Tinci Materials 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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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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