Correlation Between Guangdong Advertising and Aofu Environmental
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By analyzing existing cross correlation between Guangdong Advertising Co and Aofu Environmental Technology, you can compare the effects of market volatilities on Guangdong Advertising and Aofu 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 Advertising with a short position of Aofu Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Advertising and Aofu Environmental.
Diversification Opportunities for Guangdong Advertising and Aofu Environmental
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangdong and Aofu is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Advertising Co and Aofu Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aofu Environmental 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 Aofu Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aofu Environmental has no effect on the direction of Guangdong Advertising i.e., Guangdong Advertising and Aofu Environmental go up and down completely randomly.
Pair Corralation between Guangdong Advertising and Aofu Environmental
Assuming the 90 days trading horizon Guangdong Advertising Co is expected to generate 2.3 times more return on investment than Aofu Environmental. However, Guangdong Advertising is 2.3 times more volatile than Aofu Environmental Technology. It trades about 0.26 of its potential returns per unit of risk. Aofu Environmental Technology is currently generating about 0.09 per unit of risk. If you would invest 625.00 in Guangdong Advertising Co on September 3, 2024 and sell it today you would earn a total of 231.00 from holding Guangdong Advertising Co or generate 36.96% 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. Aofu Environmental Technology
Performance |
| Timeline |
| Guangdong Advertising |
| Aofu Environmental |
Guangdong Advertising and Aofu Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Advertising and Aofu Environmental
The main advantage of trading using opposite Guangdong Advertising and Aofu Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Advertising position performs unexpectedly, Aofu 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 Aofu Environmental will offset losses from the drop in Aofu Environmental's long position.| Guangdong Advertising vs. Guocheng Mining Co | Guangdong Advertising vs. Guangzhou Haige Communications | Guangdong Advertising vs. FSPG Hi Tech Co | Guangdong Advertising vs. Sunwave Communications Co |
| Aofu Environmental vs. Zijin Mining Group | Aofu Environmental vs. Baoshan Iron Steel | Aofu Environmental vs. Rongsheng Petrochemical Co | Aofu Environmental vs. Hoshine Silicon Ind |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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