Correlation Between Guangzhou Zhujiang and Hangzhou Guotai
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By analyzing existing cross correlation between Guangzhou Zhujiang Brewery and Hangzhou Guotai Environmental, you can compare the effects of market volatilities on Guangzhou Zhujiang and Hangzhou Guotai 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 Guangzhou Zhujiang with a short position of Hangzhou Guotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Zhujiang and Hangzhou Guotai.
Diversification Opportunities for Guangzhou Zhujiang and Hangzhou Guotai
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangzhou and Hangzhou is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Zhujiang Brewery and Hangzhou Guotai Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Guotai Envi and Guangzhou Zhujiang 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 Guangzhou Zhujiang Brewery are associated (or correlated) with Hangzhou Guotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Guotai Envi has no effect on the direction of Guangzhou Zhujiang i.e., Guangzhou Zhujiang and Hangzhou Guotai go up and down completely randomly.
Pair Corralation between Guangzhou Zhujiang and Hangzhou Guotai
Assuming the 90 days trading horizon Guangzhou Zhujiang Brewery is expected to under-perform the Hangzhou Guotai. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou Zhujiang Brewery is 2.08 times less risky than Hangzhou Guotai. The stock trades about -0.27 of its potential returns per unit of risk. The Hangzhou Guotai Environmental is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,115 in Hangzhou Guotai Environmental on November 7, 2024 and sell it today you would earn a total of 55.00 from holding Hangzhou Guotai Environmental or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Zhujiang Brewery vs. Hangzhou Guotai Environmental
Performance |
| Timeline |
| Guangzhou Zhujiang |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Hangzhou Guotai Envi |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Guangzhou Zhujiang and Hangzhou Guotai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Zhujiang and Hangzhou Guotai
The main advantage of trading using opposite Guangzhou Zhujiang and Hangzhou Guotai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Zhujiang position performs unexpectedly, Hangzhou Guotai 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 Hangzhou Guotai will offset losses from the drop in Hangzhou Guotai's long position.The idea behind Guangzhou Zhujiang Brewery and Hangzhou Guotai Environmental 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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