Correlation Between Changshu Ruite and Guangxi Guiguan
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By analyzing existing cross correlation between Changshu Ruite Electric and Guangxi Guiguan Electric, you can compare the effects of market volatilities on Changshu Ruite and Guangxi Guiguan 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 Changshu Ruite with a short position of Guangxi Guiguan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changshu Ruite and Guangxi Guiguan.
Diversification Opportunities for Changshu Ruite and Guangxi Guiguan
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Changshu and Guangxi is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Changshu Ruite Electric and Guangxi Guiguan Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangxi Guiguan Electric and Changshu Ruite 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 Changshu Ruite Electric are associated (or correlated) with Guangxi Guiguan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangxi Guiguan Electric has no effect on the direction of Changshu Ruite i.e., Changshu Ruite and Guangxi Guiguan go up and down completely randomly.
Pair Corralation between Changshu Ruite and Guangxi Guiguan
Assuming the 90 days trading horizon Changshu Ruite Electric is expected to generate 1.43 times more return on investment than Guangxi Guiguan. However, Changshu Ruite is 1.43 times more volatile than Guangxi Guiguan Electric. It trades about 0.06 of its potential returns per unit of risk. Guangxi Guiguan Electric is currently generating about -0.26 per unit of risk. If you would invest 690.00 in Changshu Ruite Electric on November 7, 2024 and sell it today you would earn a total of 12.00 from holding Changshu Ruite Electric or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changshu Ruite Electric vs. Guangxi Guiguan Electric
Performance |
| Timeline |
| Changshu Ruite Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Guangxi Guiguan Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Changshu Ruite and Guangxi Guiguan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changshu Ruite and Guangxi Guiguan
The main advantage of trading using opposite Changshu Ruite and Guangxi Guiguan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changshu Ruite position performs unexpectedly, Guangxi Guiguan 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 Guangxi Guiguan will offset losses from the drop in Guangxi Guiguan's long position.The idea behind Changshu Ruite Electric and Guangxi Guiguan Electric 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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