Correlation Between Guangzhou Zhujiang and Jiangsu GDK
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By analyzing existing cross correlation between Guangzhou Zhujiang Brewery and Jiangsu GDK Biotechnology, you can compare the effects of market volatilities on Guangzhou Zhujiang and Jiangsu GDK 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 Jiangsu GDK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Zhujiang and Jiangsu GDK.
Diversification Opportunities for Guangzhou Zhujiang and Jiangsu GDK
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangzhou and Jiangsu is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Zhujiang Brewery and Jiangsu GDK Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu GDK Biotechnology 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 Jiangsu GDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu GDK Biotechnology has no effect on the direction of Guangzhou Zhujiang i.e., Guangzhou Zhujiang and Jiangsu GDK go up and down completely randomly.
Pair Corralation between Guangzhou Zhujiang and Jiangsu GDK
Assuming the 90 days trading horizon Guangzhou Zhujiang Brewery is expected to generate 0.45 times more return on investment than Jiangsu GDK. However, Guangzhou Zhujiang Brewery is 2.21 times less risky than Jiangsu GDK. It trades about 0.01 of its potential returns per unit of risk. Jiangsu GDK Biotechnology is currently generating about -0.04 per unit of risk. If you would invest 868.00 in Guangzhou Zhujiang Brewery on November 7, 2024 and sell it today you would earn a total of 45.00 from holding Guangzhou Zhujiang Brewery or generate 5.18% 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. Jiangsu GDK Biotechnology
Performance |
| Timeline |
| Guangzhou Zhujiang |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Jiangsu GDK Biotechnology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Guangzhou Zhujiang and Jiangsu GDK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Zhujiang and Jiangsu GDK
The main advantage of trading using opposite Guangzhou Zhujiang and Jiangsu GDK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Zhujiang position performs unexpectedly, Jiangsu GDK 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 Jiangsu GDK will offset losses from the drop in Jiangsu GDK's long position.The idea behind Guangzhou Zhujiang Brewery and Jiangsu GDK Biotechnology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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