Correlation Between CITY OFFICE and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and Guangdong Investment 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 CITY OFFICE and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITY OFFICE REIT and Guangdong Investment Limited, you can compare the effects of market volatilities on CITY OFFICE and Guangdong Investment 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 CITY OFFICE with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Guangdong Investment.
Diversification Opportunities for CITY OFFICE and Guangdong Investment
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CITY and Guangdong is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and CITY OFFICE 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 CITY OFFICE REIT are associated (or correlated) with Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Guangdong Investment go up and down completely randomly.
Pair Corralation between CITY OFFICE and Guangdong Investment
Assuming the 90 days horizon CITY OFFICE REIT is expected to under-perform the Guangdong Investment. But the stock apears to be less risky and, when comparing its historical volatility, CITY OFFICE REIT is 1.72 times less risky than Guangdong Investment. The stock trades about -0.08 of its potential returns per unit of risk. The Guangdong Investment Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Guangdong Investment Limited on October 30, 2024 and sell it today you would earn a total of 15.00 from holding Guangdong Investment Limited or generate 26.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. Guangdong Investment Limited
Performance |
| Timeline |
| CITY OFFICE REIT |
| Guangdong Investment |
CITY OFFICE and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and Guangdong Investment
The main advantage of trading using opposite CITY OFFICE and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, Guangdong Investment 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 Investment will offset losses from the drop in Guangdong Investment's long position.| CITY OFFICE vs. SPORT LISBOA E | CITY OFFICE vs. Air Transport Services | CITY OFFICE vs. BioNTech SE | CITY OFFICE vs. GAZTRTECHNIUADR15EO01 |
| Guangdong Investment vs. PARKEN Sport Entertainment | Guangdong Investment vs. Aluminum of | Guangdong Investment vs. FIREWEED METALS P | Guangdong Investment vs. ARDAGH METAL PACDL 0001 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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