Correlation Between 516220 and Guangdong Tianhe

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Can any of the company-specific risk be diversified away by investing in both 516220 and Guangdong Tianhe 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 516220 and Guangdong Tianhe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 516220 and Guangdong Tianhe Agricultural, you can compare the effects of market volatilities on 516220 and Guangdong Tianhe 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 516220 with a short position of Guangdong Tianhe. Check out your portfolio center. Please also check ongoing floating volatility patterns of 516220 and Guangdong Tianhe.

Diversification Opportunities for 516220 and Guangdong Tianhe

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between 516220 and Guangdong is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding 516220 and Guangdong Tianhe Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Tianhe Agr and 516220 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 516220 are associated (or correlated) with Guangdong Tianhe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Tianhe Agr has no effect on the direction of 516220 i.e., 516220 and Guangdong Tianhe go up and down completely randomly.

Pair Corralation between 516220 and Guangdong Tianhe

Assuming the 90 days trading horizon 516220 is expected to generate 0.31 times more return on investment than Guangdong Tianhe. However, 516220 is 3.23 times less risky than Guangdong Tianhe. It trades about 0.01 of its potential returns per unit of risk. Guangdong Tianhe Agricultural is currently generating about -0.03 per unit of risk. If you would invest  65.00  in 516220 on September 25, 2024 and sell it today you would earn a total of  0.00  from holding 516220 or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

516220  vs.  Guangdong Tianhe Agricultural

 Performance 
       Timeline  
516220 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in 516220 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 516220 sustained solid returns over the last few months and may actually be approaching a breakup point.
Guangdong Tianhe Agr 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Tianhe Agricultural are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Tianhe sustained solid returns over the last few months and may actually be approaching a breakup point.

516220 and Guangdong Tianhe Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 516220 and Guangdong Tianhe

The main advantage of trading using opposite 516220 and Guangdong Tianhe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 516220 position performs unexpectedly, Guangdong Tianhe 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 Guangdong Tianhe will offset losses from the drop in Guangdong Tianhe's long position.
The idea behind 516220 and Guangdong Tianhe Agricultural 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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