Correlation Between GANGLONG CHINA and United Utilities
Can any of the company-specific risk be diversified away by investing in both GANGLONG CHINA and United Utilities 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 GANGLONG CHINA and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GANGLONG CHINA PRGRLTD and United Utilities Group, you can compare the effects of market volatilities on GANGLONG CHINA and United Utilities 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 GANGLONG CHINA with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of GANGLONG CHINA and United Utilities.
Diversification Opportunities for GANGLONG CHINA and United Utilities
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GANGLONG and United is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding GANGLONG CHINA PRGRLTD and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and GANGLONG CHINA 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 GANGLONG CHINA PRGRLTD are associated (or correlated) with United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of GANGLONG CHINA i.e., GANGLONG CHINA and United Utilities go up and down completely randomly.
Pair Corralation between GANGLONG CHINA and United Utilities
Assuming the 90 days horizon GANGLONG CHINA PRGRLTD is expected to generate 42.44 times more return on investment than United Utilities. However, GANGLONG CHINA is 42.44 times more volatile than United Utilities Group. It trades about 0.11 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.03 per unit of risk. If you would invest 0.70 in GANGLONG CHINA PRGRLTD on November 7, 2024 and sell it today you would earn a total of 0.15 from holding GANGLONG CHINA PRGRLTD or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GANGLONG CHINA PRGRLTD vs. United Utilities Group
Performance |
| Timeline |
| GANGLONG CHINA PRGRLTD |
| United Utilities |
GANGLONG CHINA and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GANGLONG CHINA and United Utilities
The main advantage of trading using opposite GANGLONG CHINA and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GANGLONG CHINA position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| GANGLONG CHINA vs. SCANSOURCE | GANGLONG CHINA vs. QINGCI GAMES INC | GANGLONG CHINA vs. WILLIS LEASE FIN | GANGLONG CHINA vs. ALBIS LEASING AG |
| United Utilities vs. Salesforce | United Utilities vs. ZhongAn Online P | United Utilities vs. New Residential Investment | United Utilities vs. Odyssean Investment Trust |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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