Correlation Between Guosheng Financial and Shanghai Rongtai
Specify exactly 2 symbols:
By analyzing existing cross correlation between Guosheng Financial Holding and Shanghai Rongtai Health, you can compare the effects of market volatilities on Guosheng Financial and Shanghai Rongtai 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 Shanghai Rongtai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guosheng Financial and Shanghai Rongtai.
Diversification Opportunities for Guosheng Financial and Shanghai Rongtai
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guosheng and Shanghai is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Guosheng Financial Holding and Shanghai Rongtai Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Rongtai Health 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 Shanghai Rongtai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Rongtai Health has no effect on the direction of Guosheng Financial i.e., Guosheng Financial and Shanghai Rongtai go up and down completely randomly.
Pair Corralation between Guosheng Financial and Shanghai Rongtai
Assuming the 90 days trading horizon Guosheng Financial Holding is expected to generate 2.2 times more return on investment than Shanghai Rongtai. However, Guosheng Financial is 2.2 times more volatile than Shanghai Rongtai Health. It trades about 0.09 of its potential returns per unit of risk. Shanghai Rongtai Health is currently generating about 0.09 per unit of risk. If you would invest 1,283 in Guosheng Financial Holding on November 7, 2024 and sell it today you would earn a total of 59.00 from holding Guosheng Financial Holding or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guosheng Financial Holding vs. Shanghai Rongtai Health
Performance |
| Timeline |
| Guosheng Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Shanghai Rongtai Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Guosheng Financial and Shanghai Rongtai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guosheng Financial and Shanghai Rongtai
The main advantage of trading using opposite Guosheng Financial and Shanghai Rongtai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guosheng Financial position performs unexpectedly, Shanghai Rongtai 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 Shanghai Rongtai will offset losses from the drop in Shanghai Rongtai's long position.The idea behind Guosheng Financial Holding and Shanghai Rongtai Health 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |