Correlation Between Guangdong Transtek and XinJiang GuoTong
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By analyzing existing cross correlation between Guangdong Transtek Medical and XinJiang GuoTong Pipeline, you can compare the effects of market volatilities on Guangdong Transtek and XinJiang GuoTong 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 Transtek with a short position of XinJiang GuoTong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Transtek and XinJiang GuoTong.
Diversification Opportunities for Guangdong Transtek and XinJiang GuoTong
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and XinJiang is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Transtek Medical and XinJiang GuoTong Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XinJiang GuoTong Pipeline and Guangdong Transtek 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 Transtek Medical are associated (or correlated) with XinJiang GuoTong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XinJiang GuoTong Pipeline has no effect on the direction of Guangdong Transtek i.e., Guangdong Transtek and XinJiang GuoTong go up and down completely randomly.
Pair Corralation between Guangdong Transtek and XinJiang GuoTong
Assuming the 90 days trading horizon Guangdong Transtek Medical is expected to under-perform the XinJiang GuoTong. But the stock apears to be less risky and, when comparing its historical volatility, Guangdong Transtek Medical is 1.14 times less risky than XinJiang GuoTong. The stock trades about -0.38 of its potential returns per unit of risk. The XinJiang GuoTong Pipeline is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest 1,028 in XinJiang GuoTong Pipeline on October 16, 2024 and sell it today you would lose (248.00) from holding XinJiang GuoTong Pipeline or give up 24.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Guangdong Transtek Medical vs. XinJiang GuoTong Pipeline
Performance |
| Timeline |
| Guangdong Transtek |
| XinJiang GuoTong Pipeline |
Guangdong Transtek and XinJiang GuoTong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Transtek and XinJiang GuoTong
The main advantage of trading using opposite Guangdong Transtek and XinJiang GuoTong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Transtek position performs unexpectedly, XinJiang GuoTong 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 XinJiang GuoTong will offset losses from the drop in XinJiang GuoTong's long position.The idea behind Guangdong Transtek Medical and XinJiang GuoTong Pipeline 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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