Correlation Between Guangzhou Haige and Hangzhou EZVIZ

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Can any of the company-specific risk be diversified away by investing in both Guangzhou Haige and Hangzhou EZVIZ at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Guangzhou Haige and Hangzhou EZVIZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangzhou Haige Communications and Hangzhou EZVIZ Network, you can compare the effects of market volatilities on Guangzhou Haige and Hangzhou EZVIZ 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 Haige with a short position of Hangzhou EZVIZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Haige and Hangzhou EZVIZ.

Diversification Opportunities for Guangzhou Haige and Hangzhou EZVIZ

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Guangzhou and Hangzhou is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Haige Communications and Hangzhou EZVIZ Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou EZVIZ Network and Guangzhou Haige 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 Haige Communications are associated (or correlated) with Hangzhou EZVIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou EZVIZ Network has no effect on the direction of Guangzhou Haige i.e., Guangzhou Haige and Hangzhou EZVIZ go up and down completely randomly.

Pair Corralation between Guangzhou Haige and Hangzhou EZVIZ

Assuming the 90 days trading horizon Guangzhou Haige Communications is expected to under-perform the Hangzhou EZVIZ. In addition to that, Guangzhou Haige is 1.3 times more volatile than Hangzhou EZVIZ Network. It trades about -0.17 of its total potential returns per unit of risk. Hangzhou EZVIZ Network is currently generating about -0.1 per unit of volatility. If you would invest  3,130  in Hangzhou EZVIZ Network on September 29, 2024 and sell it today you would lose (125.00) from holding Hangzhou EZVIZ Network or give up 3.99% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Guangzhou Haige Communications  vs.  Hangzhou EZVIZ Network

 Performance 
       Timeline  
Guangzhou Haige Comm 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Haige Communications are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Haige may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Hangzhou EZVIZ Network 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hangzhou EZVIZ Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Guangzhou Haige and Hangzhou EZVIZ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guangzhou Haige and Hangzhou EZVIZ

The main advantage of trading using opposite Guangzhou Haige and Hangzhou EZVIZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Haige position performs unexpectedly, Hangzhou EZVIZ 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 EZVIZ will offset losses from the drop in Hangzhou EZVIZ's long position.
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The idea behind Guangzhou Haige Communications and Hangzhou EZVIZ Network 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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