Correlation Between GuoChuang Software and GRG Banking

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Can any of the company-specific risk be diversified away by investing in both GuoChuang Software and GRG Banking 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 GuoChuang Software and GRG Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GuoChuang Software Co and GRG Banking Equipment, you can compare the effects of market volatilities on GuoChuang Software and GRG Banking 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 GuoChuang Software with a short position of GRG Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of GuoChuang Software and GRG Banking.

Diversification Opportunities for GuoChuang Software and GRG Banking

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between GuoChuang and GRG is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GuoChuang Software Co and GRG Banking Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRG Banking Equipment and GuoChuang Software 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 GuoChuang Software Co are associated (or correlated) with GRG Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRG Banking Equipment has no effect on the direction of GuoChuang Software i.e., GuoChuang Software and GRG Banking go up and down completely randomly.

Pair Corralation between GuoChuang Software and GRG Banking

Assuming the 90 days trading horizon GuoChuang Software Co is expected to generate 1.79 times more return on investment than GRG Banking. However, GuoChuang Software is 1.79 times more volatile than GRG Banking Equipment. It trades about 0.02 of its potential returns per unit of risk. GRG Banking Equipment is currently generating about 0.02 per unit of risk. If you would invest  2,525  in GuoChuang Software Co on November 2, 2024 and sell it today you would lose (115.00) from holding GuoChuang Software Co or give up 4.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

GuoChuang Software Co  vs.  GRG Banking Equipment

 Performance 
       Timeline  
GuoChuang Software 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GuoChuang Software Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GuoChuang Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
GRG Banking Equipment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GRG Banking Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GRG Banking is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GuoChuang Software and GRG Banking Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GuoChuang Software and GRG Banking

The main advantage of trading using opposite GuoChuang Software and GRG Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GuoChuang Software position performs unexpectedly, GRG Banking 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 GRG Banking will offset losses from the drop in GRG Banking's long position.
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The idea behind GuoChuang Software Co and GRG Banking Equipment 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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