Correlation Between Guangxi Wuzhou and Vats Liquor

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Can any of the company-specific risk be diversified away by investing in both Guangxi Wuzhou and Vats Liquor 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 Guangxi Wuzhou and Vats Liquor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangxi Wuzhou Communications and Vats Liquor Chain, you can compare the effects of market volatilities on Guangxi Wuzhou and Vats Liquor 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 Wuzhou with a short position of Vats Liquor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangxi Wuzhou and Vats Liquor.

Diversification Opportunities for Guangxi Wuzhou and Vats Liquor

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Guangxi and Vats is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Guangxi Wuzhou Communications and Vats Liquor Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vats Liquor Chain and Guangxi Wuzhou 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 Wuzhou Communications are associated (or correlated) with Vats Liquor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vats Liquor Chain has no effect on the direction of Guangxi Wuzhou i.e., Guangxi Wuzhou and Vats Liquor go up and down completely randomly.

Pair Corralation between Guangxi Wuzhou and Vats Liquor

Assuming the 90 days trading horizon Guangxi Wuzhou Communications is expected to generate 1.5 times more return on investment than Vats Liquor. However, Guangxi Wuzhou is 1.5 times more volatile than Vats Liquor Chain. It trades about -0.01 of its potential returns per unit of risk. Vats Liquor Chain is currently generating about -0.09 per unit of risk. If you would invest  469.00  in Guangxi Wuzhou Communications on October 17, 2024 and sell it today you would lose (17.00) from holding Guangxi Wuzhou Communications or give up 3.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Guangxi Wuzhou Communications  vs.  Vats Liquor Chain

 Performance 
       Timeline  
Guangxi Wuzhou Commu 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Guangxi Wuzhou Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangxi Wuzhou sustained solid returns over the last few months and may actually be approaching a breakup point.
Vats Liquor Chain 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Vats Liquor Chain are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vats Liquor sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangxi Wuzhou and Vats Liquor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guangxi Wuzhou and Vats Liquor

The main advantage of trading using opposite Guangxi Wuzhou and Vats Liquor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangxi Wuzhou position performs unexpectedly, Vats Liquor 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 Vats Liquor will offset losses from the drop in Vats Liquor's long position.
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The idea behind Guangxi Wuzhou Communications and Vats Liquor Chain 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.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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