Correlation Between Guangdong Electric and Industrial
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By analyzing existing cross correlation between Guangdong Electric Power and Industrial and Commercial, you can compare the effects of market volatilities on Guangdong Electric and Industrial 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 Guangdong Electric with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Electric and Industrial.
Diversification Opportunities for Guangdong Electric and Industrial
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guangdong and Industrial is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Electric Power and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Guangdong Electric 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 Guangdong Electric Power are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Guangdong Electric i.e., Guangdong Electric and Industrial go up and down completely randomly.
Pair Corralation between Guangdong Electric and Industrial
Assuming the 90 days trading horizon Guangdong Electric Power is expected to under-perform the Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Guangdong Electric Power is 1.25 times less risky than Industrial. The stock trades about -0.01 of its potential returns per unit of risk. The Industrial and Commercial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 405.00 in Industrial and Commercial on October 15, 2024 and sell it today you would earn a total of 262.00 from holding Industrial and Commercial or generate 64.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Electric Power vs. Industrial and Commercial
Performance |
| Timeline |
| Guangdong Electric Power |
| Industrial and Commercial |
Guangdong Electric and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Electric and Industrial
The main advantage of trading using opposite Guangdong Electric and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Electric position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.| Guangdong Electric vs. Everdisplay Optronics Shanghai | Guangdong Electric vs. Lontium Semiconductor Corp | Guangdong Electric vs. GRINM Semiconductor Materials | Guangdong Electric vs. Chongqing Brewery Co |
| Industrial vs. East Money Information | Industrial vs. Marssenger Kitchenware Co | Industrial vs. Guangzhou Ruoyuchen Information | Industrial vs. Sublime China Information |
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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