Correlation Between Guangdong Jingyi and Sinocat Environmental
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By analyzing existing cross correlation between Guangdong Jingyi Metal and Sinocat Environmental Technology, you can compare the effects of market volatilities on Guangdong Jingyi and Sinocat Environmental 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 Guangdong Jingyi with a short position of Sinocat Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and Sinocat Environmental.
Diversification Opportunities for Guangdong Jingyi and Sinocat Environmental
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangdong and Sinocat is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Sinocat Environmental Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinocat Environmental and Guangdong Jingyi 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 Guangdong Jingyi Metal are associated (or correlated) with Sinocat Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinocat Environmental has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Sinocat Environmental go up and down completely randomly.
Pair Corralation between Guangdong Jingyi and Sinocat Environmental
Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to generate 0.76 times more return on investment than Sinocat Environmental. However, Guangdong Jingyi Metal is 1.32 times less risky than Sinocat Environmental. It trades about -0.23 of its potential returns per unit of risk. Sinocat Environmental Technology is currently generating about -0.33 per unit of risk. If you would invest 795.00 in Guangdong Jingyi Metal on October 17, 2024 and sell it today you would lose (128.00) from holding Guangdong Jingyi Metal or give up 16.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Jingyi Metal vs. Sinocat Environmental Technolo
Performance |
| Timeline |
| Guangdong Jingyi Metal |
| Sinocat Environmental |
Guangdong Jingyi and Sinocat Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Jingyi and Sinocat Environmental
The main advantage of trading using opposite Guangdong Jingyi and Sinocat Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jingyi position performs unexpectedly, Sinocat Environmental 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 Sinocat Environmental will offset losses from the drop in Sinocat Environmental's long position.The idea behind Guangdong Jingyi Metal and Sinocat Environmental Technology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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