Correlation Between Citic Guoan and Guangzhou Ruoyuchen
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By analyzing existing cross correlation between Citic Guoan Wine and Guangzhou Ruoyuchen Information, you can compare the effects of market volatilities on Citic Guoan and Guangzhou Ruoyuchen 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 Citic Guoan with a short position of Guangzhou Ruoyuchen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Guoan and Guangzhou Ruoyuchen.
Diversification Opportunities for Citic Guoan and Guangzhou Ruoyuchen
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citic and Guangzhou is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Guangzhou Ruoyuchen Informatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Ruoyuchen and Citic Guoan 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 Citic Guoan Wine are associated (or correlated) with Guangzhou Ruoyuchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Ruoyuchen has no effect on the direction of Citic Guoan i.e., Citic Guoan and Guangzhou Ruoyuchen go up and down completely randomly.
Pair Corralation between Citic Guoan and Guangzhou Ruoyuchen
Assuming the 90 days trading horizon Citic Guoan Wine is expected to under-perform the Guangzhou Ruoyuchen. But the stock apears to be less risky and, when comparing its historical volatility, Citic Guoan Wine is 1.44 times less risky than Guangzhou Ruoyuchen. The stock trades about -0.02 of its potential returns per unit of risk. The Guangzhou Ruoyuchen Information is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,276 in Guangzhou Ruoyuchen Information on November 8, 2024 and sell it today you would earn a total of 1,483 from holding Guangzhou Ruoyuchen Information or generate 116.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Guoan Wine vs. Guangzhou Ruoyuchen Informatio
Performance |
| Timeline |
| Citic Guoan Wine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Guangzhou Ruoyuchen |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Citic Guoan and Guangzhou Ruoyuchen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Guoan and Guangzhou Ruoyuchen
The main advantage of trading using opposite Citic Guoan and Guangzhou Ruoyuchen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Guoan position performs unexpectedly, Guangzhou Ruoyuchen 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 Guangzhou Ruoyuchen will offset losses from the drop in Guangzhou Ruoyuchen's long position.The idea behind Citic Guoan Wine and Guangzhou Ruoyuchen Information 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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