Correlation Between Guilin Seamild and Gan Yuan

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Can any of the company-specific risk be diversified away by investing in both Guilin Seamild and Gan Yuan 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 Guilin Seamild and Gan Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guilin Seamild Foods and Gan Yuan Foods, you can compare the effects of market volatilities on Guilin Seamild and Gan Yuan 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 Guilin Seamild with a short position of Gan Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guilin Seamild and Gan Yuan.

Diversification Opportunities for Guilin Seamild and Gan Yuan

GuilinGanDiversified AwayGuilinGanDiversified Away100%
0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Guilin and Gan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Guilin Seamild Foods and Gan Yuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Yuan Foods and Guilin Seamild 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 Guilin Seamild Foods are associated (or correlated) with Gan Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Yuan Foods has no effect on the direction of Guilin Seamild i.e., Guilin Seamild and Gan Yuan go up and down completely randomly.

Pair Corralation between Guilin Seamild and Gan Yuan

Assuming the 90 days trading horizon Guilin Seamild Foods is expected to generate 0.74 times more return on investment than Gan Yuan. However, Guilin Seamild Foods is 1.34 times less risky than Gan Yuan. It trades about -0.05 of its potential returns per unit of risk. Gan Yuan Foods is currently generating about -0.28 per unit of risk. If you would invest  1,640  in Guilin Seamild Foods on November 20, 2024 and sell it today you would lose (37.00) from holding Guilin Seamild Foods or give up 2.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy93.75%
ValuesDaily Returns

Guilin Seamild Foods  vs.  Gan Yuan Foods

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510152025
JavaScript chart by amCharts 3.21.15002956 002991
       Timeline  
Guilin Seamild Foods 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Guilin Seamild Foods are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guilin Seamild sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb131415161718
Gan Yuan Foods 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Gan Yuan Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gan Yuan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7580859095

Guilin Seamild and Gan Yuan Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.25-6.93-4.61-2.280.02.344.767.189.5912.01 0.0200.0250.0300.0350.0400.0450.050
JavaScript chart by amCharts 3.21.15002956 002991
       Returns  

Pair Trading with Guilin Seamild and Gan Yuan

The main advantage of trading using opposite Guilin Seamild and Gan Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guilin Seamild position performs unexpectedly, Gan Yuan 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 Gan Yuan will offset losses from the drop in Gan Yuan's long position.
The idea behind Guilin Seamild Foods and Gan Yuan Foods 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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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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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