Correlation Between Emdoor Information and Guangzhou Restaurants
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By analyzing existing cross correlation between Emdoor Information Co and Guangzhou Restaurants Group, you can compare the effects of market volatilities on Emdoor Information and Guangzhou Restaurants 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 Emdoor Information with a short position of Guangzhou Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emdoor Information and Guangzhou Restaurants.
Diversification Opportunities for Emdoor Information and Guangzhou Restaurants
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Emdoor and Guangzhou is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Emdoor Information Co and Guangzhou Restaurants Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Restaurants and Emdoor Information 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 Emdoor Information Co are associated (or correlated) with Guangzhou Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Restaurants has no effect on the direction of Emdoor Information i.e., Emdoor Information and Guangzhou Restaurants go up and down completely randomly.
Pair Corralation between Emdoor Information and Guangzhou Restaurants
Assuming the 90 days trading horizon Emdoor Information Co is expected to generate 1.23 times more return on investment than Guangzhou Restaurants. However, Emdoor Information is 1.23 times more volatile than Guangzhou Restaurants Group. It trades about 0.17 of its potential returns per unit of risk. Guangzhou Restaurants Group is currently generating about 0.08 per unit of risk. If you would invest 3,875 in Emdoor Information Co on August 31, 2024 and sell it today you would earn a total of 1,403 from holding Emdoor Information Co or generate 36.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emdoor Information Co vs. Guangzhou Restaurants Group
Performance |
| Timeline |
| Emdoor Information |
| Guangzhou Restaurants |
Emdoor Information and Guangzhou Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emdoor Information and Guangzhou Restaurants
The main advantage of trading using opposite Emdoor Information and Guangzhou Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emdoor Information position performs unexpectedly, Guangzhou Restaurants 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 Restaurants will offset losses from the drop in Guangzhou Restaurants' long position.The idea behind Emdoor Information Co and Guangzhou Restaurants Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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