Correlation Between GRG Banking and China Sports

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

Diversification Opportunities for GRG Banking and China Sports

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between GRG and China is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GRG Banking Equipment and China Sports Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Sports Industry and GRG Banking 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 GRG Banking Equipment are associated (or correlated) with China Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Sports Industry has no effect on the direction of GRG Banking i.e., GRG Banking and China Sports go up and down completely randomly.

Pair Corralation between GRG Banking and China Sports

Assuming the 90 days trading horizon GRG Banking Equipment is expected to generate 1.1 times more return on investment than China Sports. However, GRG Banking is 1.1 times more volatile than China Sports Industry. It trades about 0.06 of its potential returns per unit of risk. China Sports Industry is currently generating about 0.04 per unit of risk. If you would invest  845.00  in GRG Banking Equipment on November 1, 2024 and sell it today you would earn a total of  268.00  from holding GRG Banking Equipment or generate 31.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

GRG Banking Equipment  vs.  China Sports Industry

 Performance 
       Timeline  
GRG Banking Equipment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GRG Banking Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GRG Banking is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
China Sports Industry 

Risk-Adjusted Performance

0 of 100

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

GRG Banking and China Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GRG Banking and China Sports

The main advantage of trading using opposite GRG Banking and China Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRG Banking position performs unexpectedly, China Sports 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 Sports will offset losses from the drop in China Sports' long position.
The idea behind GRG Banking Equipment and China Sports Industry 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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