Correlation Between Guangzhou Ruoyuchen and Xiandai Investment
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By analyzing existing cross correlation between Guangzhou Ruoyuchen Information and Xiandai Investment Co, you can compare the effects of market volatilities on Guangzhou Ruoyuchen and Xiandai Investment 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 Ruoyuchen with a short position of Xiandai Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Ruoyuchen and Xiandai Investment.
Diversification Opportunities for Guangzhou Ruoyuchen and Xiandai Investment
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangzhou and Xiandai is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Ruoyuchen Informatio and Xiandai Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiandai Investment and Guangzhou Ruoyuchen 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 Ruoyuchen Information are associated (or correlated) with Xiandai Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiandai Investment has no effect on the direction of Guangzhou Ruoyuchen i.e., Guangzhou Ruoyuchen and Xiandai Investment go up and down completely randomly.
Pair Corralation between Guangzhou Ruoyuchen and Xiandai Investment
Assuming the 90 days trading horizon Guangzhou Ruoyuchen Information is expected to generate 2.35 times more return on investment than Xiandai Investment. However, Guangzhou Ruoyuchen is 2.35 times more volatile than Xiandai Investment Co. It trades about 0.05 of its potential returns per unit of risk. Xiandai Investment Co is currently generating about 0.03 per unit of risk. If you would invest 1,362 in Guangzhou Ruoyuchen Information on September 3, 2024 and sell it today you would earn a total of 935.00 from holding Guangzhou Ruoyuchen Information or generate 68.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Ruoyuchen Informatio vs. Xiandai Investment Co
Performance |
| Timeline |
| Guangzhou Ruoyuchen |
| Xiandai Investment |
Guangzhou Ruoyuchen and Xiandai Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Ruoyuchen and Xiandai Investment
The main advantage of trading using opposite Guangzhou Ruoyuchen and Xiandai Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Ruoyuchen position performs unexpectedly, Xiandai Investment 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 Xiandai Investment will offset losses from the drop in Xiandai Investment's long position.The idea behind Guangzhou Ruoyuchen Information and Xiandai Investment Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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