Correlation Between Guangxi Guiguan and China Longyuan
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By analyzing existing cross correlation between Guangxi Guiguan Electric and China Longyuan Power, you can compare the effects of market volatilities on Guangxi Guiguan and China Longyuan 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 Guangxi Guiguan with a short position of China Longyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangxi Guiguan and China Longyuan.
Diversification Opportunities for Guangxi Guiguan and China Longyuan
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangxi and China is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Guangxi Guiguan Electric and China Longyuan Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Longyuan Power and Guangxi Guiguan 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 Guangxi Guiguan Electric are associated (or correlated) with China Longyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Longyuan Power has no effect on the direction of Guangxi Guiguan i.e., Guangxi Guiguan and China Longyuan go up and down completely randomly.
Pair Corralation between Guangxi Guiguan and China Longyuan
Assuming the 90 days trading horizon Guangxi Guiguan Electric is expected to under-perform the China Longyuan. In addition to that, Guangxi Guiguan is 1.2 times more volatile than China Longyuan Power. It trades about -0.26 of its total potential returns per unit of risk. China Longyuan Power is currently generating about 0.04 per unit of volatility. If you would invest 1,489 in China Longyuan Power on November 7, 2024 and sell it today you would earn a total of 11.00 from holding China Longyuan Power or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangxi Guiguan Electric vs. China Longyuan Power
Performance |
| Timeline |
| Guangxi Guiguan Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China Longyuan Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Guangxi Guiguan and China Longyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangxi Guiguan and China Longyuan
The main advantage of trading using opposite Guangxi Guiguan and China Longyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangxi Guiguan position performs unexpectedly, China Longyuan 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 China Longyuan will offset losses from the drop in China Longyuan's long position.The idea behind Guangxi Guiguan Electric and China Longyuan Power 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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