Correlation Between Guilin Seamild and Shandong Publishing

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Can any of the company-specific risk be diversified away by investing in both Guilin Seamild and Shandong Publishing 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 Shandong Publishing 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 Shandong Publishing Media, you can compare the effects of market volatilities on Guilin Seamild and Shandong Publishing 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 Shandong Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guilin Seamild and Shandong Publishing.

Diversification Opportunities for Guilin Seamild and Shandong Publishing

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Guilin and Shandong is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Guilin Seamild Foods and Shandong Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Publishing Media 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 Shandong Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Publishing Media has no effect on the direction of Guilin Seamild i.e., Guilin Seamild and Shandong Publishing go up and down completely randomly.

Pair Corralation between Guilin Seamild and Shandong Publishing

Assuming the 90 days trading horizon Guilin Seamild is expected to generate 2.12 times less return on investment than Shandong Publishing. But when comparing it to its historical volatility, Guilin Seamild Foods is 1.05 times less risky than Shandong Publishing. It trades about 0.03 of its potential returns per unit of risk. Shandong Publishing Media is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  614.00  in Shandong Publishing Media on October 18, 2024 and sell it today you would earn a total of  393.00  from holding Shandong Publishing Media or generate 64.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Guilin Seamild Foods  vs.  Shandong Publishing Media

 Performance 
       Timeline  
Guilin Seamild Foods 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Guilin Seamild Foods are ranked lower than 12 (%) 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.
Shandong Publishing Media 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shandong Publishing Media 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.

Guilin Seamild and Shandong Publishing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guilin Seamild and Shandong Publishing

The main advantage of trading using opposite Guilin Seamild and Shandong Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guilin Seamild position performs unexpectedly, Shandong Publishing 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 Shandong Publishing will offset losses from the drop in Shandong Publishing's long position.
The idea behind Guilin Seamild Foods and Shandong Publishing Media 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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