Correlation Between Guangdong Wens and China State
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By analyzing existing cross correlation between Guangdong Wens Foodstuff and China State Construction, you can compare the effects of market volatilities on Guangdong Wens and China State 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 Wens with a short position of China State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Wens and China State.
Diversification Opportunities for Guangdong Wens and China State
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangdong and China is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Wens Foodstuff and China State Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China State Construction and Guangdong Wens 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 Wens Foodstuff are associated (or correlated) with China State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China State Construction has no effect on the direction of Guangdong Wens i.e., Guangdong Wens and China State go up and down completely randomly.
Pair Corralation between Guangdong Wens and China State
Assuming the 90 days trading horizon Guangdong Wens Foodstuff is expected to under-perform the China State. But the stock apears to be less risky and, when comparing its historical volatility, Guangdong Wens Foodstuff is 1.33 times less risky than China State. The stock trades about -0.24 of its potential returns per unit of risk. The China State Construction is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 601.00 in China State Construction on August 31, 2024 and sell it today you would lose (4.00) from holding China State Construction or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Wens Foodstuff vs. China State Construction
Performance |
| Timeline |
| Guangdong Wens Foodstuff |
| China State Construction |
Guangdong Wens and China State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Wens and China State
The main advantage of trading using opposite Guangdong Wens and China State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Wens position performs unexpectedly, China State 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 China State will offset losses from the drop in China State's long position.| Guangdong Wens vs. Lutian Machinery Co | Guangdong Wens vs. PetroChina Co Ltd | Guangdong Wens vs. Bank of China | Guangdong Wens vs. Gansu Jiu Steel |
| China State vs. Guangdong Wens Foodstuff | China State vs. Great Sun Foods Co | China State vs. Tianjin Pengling Rubber | China State vs. Suzhou Xingye Material |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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