Correlation Between Guangxi Guiguan and DRLimited
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By analyzing existing cross correlation between Guangxi Guiguan Electric and DR Limited, you can compare the effects of market volatilities on Guangxi Guiguan and DRLimited 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 DRLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangxi Guiguan and DRLimited.
Diversification Opportunities for Guangxi Guiguan and DRLimited
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Guangxi and DRLimited is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Guangxi Guiguan Electric and DR Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DR Limited 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 DRLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DR Limited has no effect on the direction of Guangxi Guiguan i.e., Guangxi Guiguan and DRLimited go up and down completely randomly.
Pair Corralation between Guangxi Guiguan and DRLimited
Assuming the 90 days trading horizon Guangxi Guiguan Electric is expected to under-perform the DRLimited. But the stock apears to be less risky and, when comparing its historical volatility, Guangxi Guiguan Electric is 2.63 times less risky than DRLimited. The stock trades about -0.26 of its potential returns per unit of risk. The DR Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,173 in DR Limited on November 7, 2024 and sell it today you would earn a total of 222.00 from holding DR Limited or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangxi Guiguan Electric vs. DR Limited
Performance |
| Timeline |
| Guangxi Guiguan Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| DR Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Guangxi Guiguan and DRLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangxi Guiguan and DRLimited
The main advantage of trading using opposite Guangxi Guiguan and DRLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangxi Guiguan position performs unexpectedly, DRLimited 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 DRLimited will offset losses from the drop in DRLimited's long position.The idea behind Guangxi Guiguan Electric and DR Limited 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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