Correlation Between CREO MEDICAL and GANGLONG CHINA
Can any of the company-specific risk be diversified away by investing in both CREO MEDICAL and GANGLONG CHINA 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 CREO MEDICAL and GANGLONG CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CREO MEDICAL GRP and GANGLONG CHINA PRGRLTD, you can compare the effects of market volatilities on CREO MEDICAL and GANGLONG CHINA 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 CREO MEDICAL with a short position of GANGLONG CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREO MEDICAL and GANGLONG CHINA.
Diversification Opportunities for CREO MEDICAL and GANGLONG CHINA
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CREO and GANGLONG is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CREO MEDICAL GRP and GANGLONG CHINA PRGRLTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GANGLONG CHINA PRGRLTD and CREO MEDICAL 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 CREO MEDICAL GRP are associated (or correlated) with GANGLONG CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GANGLONG CHINA PRGRLTD has no effect on the direction of CREO MEDICAL i.e., CREO MEDICAL and GANGLONG CHINA go up and down completely randomly.
Pair Corralation between CREO MEDICAL and GANGLONG CHINA
Assuming the 90 days horizon CREO MEDICAL GRP is expected to generate 0.8 times more return on investment than GANGLONG CHINA. However, CREO MEDICAL GRP is 1.26 times less risky than GANGLONG CHINA. It trades about 0.18 of its potential returns per unit of risk. GANGLONG CHINA PRGRLTD is currently generating about -0.26 per unit of risk. If you would invest 19.00 in CREO MEDICAL GRP on October 14, 2024 and sell it today you would earn a total of 3.00 from holding CREO MEDICAL GRP or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CREO MEDICAL GRP vs. GANGLONG CHINA PRGRLTD
Performance |
| Timeline |
| CREO MEDICAL GRP |
| GANGLONG CHINA PRGRLTD |
CREO MEDICAL and GANGLONG CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CREO MEDICAL and GANGLONG CHINA
The main advantage of trading using opposite CREO MEDICAL and GANGLONG CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CREO MEDICAL position performs unexpectedly, GANGLONG CHINA 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 GANGLONG CHINA will offset losses from the drop in GANGLONG CHINA's long position.| CREO MEDICAL vs. Apple Inc | CREO MEDICAL vs. Apple Inc | CREO MEDICAL vs. Apple Inc | CREO MEDICAL vs. Apple Inc |
| GANGLONG CHINA vs. MeVis Medical Solutions | GANGLONG CHINA vs. FIREWEED METALS P | GANGLONG CHINA vs. CREO MEDICAL GRP | GANGLONG CHINA vs. Merit Medical Systems |
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.
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