Correlation Between Guosheng Financial and Beijing Yanjing
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By analyzing existing cross correlation between Guosheng Financial Holding and Beijing Yanjing Brewery, you can compare the effects of market volatilities on Guosheng Financial and Beijing Yanjing 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 Guosheng Financial with a short position of Beijing Yanjing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guosheng Financial and Beijing Yanjing.
Diversification Opportunities for Guosheng Financial and Beijing Yanjing
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guosheng and Beijing is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Guosheng Financial Holding and Beijing Yanjing Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Yanjing Brewery and Guosheng Financial 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 Guosheng Financial Holding are associated (or correlated) with Beijing Yanjing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Yanjing Brewery has no effect on the direction of Guosheng Financial i.e., Guosheng Financial and Beijing Yanjing go up and down completely randomly.
Pair Corralation between Guosheng Financial and Beijing Yanjing
Assuming the 90 days trading horizon Guosheng Financial Holding is expected to generate 1.69 times more return on investment than Beijing Yanjing. However, Guosheng Financial is 1.69 times more volatile than Beijing Yanjing Brewery. It trades about 0.02 of its potential returns per unit of risk. Beijing Yanjing Brewery is currently generating about 0.02 per unit of risk. If you would invest 1,284 in Guosheng Financial Holding on September 3, 2024 and sell it today you would lose (4.00) from holding Guosheng Financial Holding or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guosheng Financial Holding vs. Beijing Yanjing Brewery
Performance |
| Timeline |
| Guosheng Financial |
| Beijing Yanjing Brewery |
Guosheng Financial and Beijing Yanjing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guosheng Financial and Beijing Yanjing
The main advantage of trading using opposite Guosheng Financial and Beijing Yanjing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guosheng Financial position performs unexpectedly, Beijing Yanjing 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 Beijing Yanjing will offset losses from the drop in Beijing Yanjing's long position.The idea behind Guosheng Financial Holding and Beijing Yanjing Brewery 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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