Correlation Between Guangdong Jinming and Tengda Construction

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Guangdong Jinming and Tengda Construction 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 Guangdong Jinming and Tengda Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Jinming Machinery and Tengda Construction Group, you can compare the effects of market volatilities on Guangdong Jinming and Tengda Construction 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 Jinming with a short position of Tengda Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jinming and Tengda Construction.

Diversification Opportunities for Guangdong Jinming and Tengda Construction

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Guangdong and Tengda is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jinming Machinery and Tengda Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tengda Construction and Guangdong Jinming 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 Jinming Machinery are associated (or correlated) with Tengda Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tengda Construction has no effect on the direction of Guangdong Jinming i.e., Guangdong Jinming and Tengda Construction go up and down completely randomly.

Pair Corralation between Guangdong Jinming and Tengda Construction

Assuming the 90 days trading horizon Guangdong Jinming Machinery is expected to generate 1.99 times more return on investment than Tengda Construction. However, Guangdong Jinming is 1.99 times more volatile than Tengda Construction Group. It trades about 0.18 of its potential returns per unit of risk. Tengda Construction Group is currently generating about 0.25 per unit of risk. If you would invest  445.00  in Guangdong Jinming Machinery on September 12, 2024 and sell it today you would earn a total of  240.00  from holding Guangdong Jinming Machinery or generate 53.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Guangdong Jinming Machinery  vs.  Tengda Construction Group

 Performance 
       Timeline  
Guangdong Jinming 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jinming Machinery are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jinming sustained solid returns over the last few months and may actually be approaching a breakup point.
Tengda Construction 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Tengda Construction Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tengda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Jinming and Tengda Construction Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guangdong Jinming and Tengda Construction

The main advantage of trading using opposite Guangdong Jinming and Tengda Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jinming position performs unexpectedly, Tengda Construction 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 Tengda Construction will offset losses from the drop in Tengda Construction's long position.
The idea behind Guangdong Jinming Machinery and Tengda Construction Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

Other Complementary Tools

Transaction History
View history of all your transactions and understand their impact on performance
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Fundamental Analysis
View fundamental data based on most recent published financial statements