Correlation Between Guangdong Advertising and Guocheng Mining
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By analyzing existing cross correlation between Guangdong Advertising Co and Guocheng Mining Co, you can compare the effects of market volatilities on Guangdong Advertising and Guocheng Mining 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 Advertising with a short position of Guocheng Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Advertising and Guocheng Mining.
Diversification Opportunities for Guangdong Advertising and Guocheng Mining
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangdong and Guocheng is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Advertising Co and Guocheng Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guocheng Mining and Guangdong Advertising 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 Advertising Co are associated (or correlated) with Guocheng Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guocheng Mining has no effect on the direction of Guangdong Advertising i.e., Guangdong Advertising and Guocheng Mining go up and down completely randomly.
Pair Corralation between Guangdong Advertising and Guocheng Mining
Assuming the 90 days trading horizon Guangdong Advertising Co is expected to generate 1.35 times more return on investment than Guocheng Mining. However, Guangdong Advertising is 1.35 times more volatile than Guocheng Mining Co. It trades about 0.26 of its potential returns per unit of risk. Guocheng Mining Co is currently generating about 0.23 per unit of risk. If you would invest 466.00 in Guangdong Advertising Co on September 12, 2024 and sell it today you would earn a total of 453.00 from holding Guangdong Advertising Co or generate 97.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Advertising Co vs. Guocheng Mining Co
Performance |
| Timeline |
| Guangdong Advertising |
| Guocheng Mining |
Guangdong Advertising and Guocheng Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Advertising and Guocheng Mining
The main advantage of trading using opposite Guangdong Advertising and Guocheng Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Advertising position performs unexpectedly, Guocheng Mining 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 Guocheng Mining will offset losses from the drop in Guocheng Mining's long position.The idea behind Guangdong Advertising Co and Guocheng Mining Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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