Correlation Between Aurora Optoelectronics and Guangzhou Tinci
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By analyzing existing cross correlation between Aurora Optoelectronics Co and Guangzhou Tinci Materials, you can compare the effects of market volatilities on Aurora Optoelectronics and Guangzhou Tinci 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 Aurora Optoelectronics with a short position of Guangzhou Tinci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Optoelectronics and Guangzhou Tinci.
Diversification Opportunities for Aurora Optoelectronics and Guangzhou Tinci
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and Guangzhou is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Optoelectronics Co and Guangzhou Tinci Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Tinci Materials and Aurora Optoelectronics 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 Aurora Optoelectronics Co are associated (or correlated) with Guangzhou Tinci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Tinci Materials has no effect on the direction of Aurora Optoelectronics i.e., Aurora Optoelectronics and Guangzhou Tinci go up and down completely randomly.
Pair Corralation between Aurora Optoelectronics and Guangzhou Tinci
Assuming the 90 days trading horizon Aurora Optoelectronics Co is expected to under-perform the Guangzhou Tinci. In addition to that, Aurora Optoelectronics is 1.87 times more volatile than Guangzhou Tinci Materials. It trades about -0.23 of its total potential returns per unit of risk. Guangzhou Tinci Materials is currently generating about -0.08 per unit of volatility. If you would invest 1,885 in Guangzhou Tinci Materials on November 3, 2024 and sell it today you would lose (57.00) from holding Guangzhou Tinci Materials or give up 3.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Optoelectronics Co vs. Guangzhou Tinci Materials
Performance |
| Timeline |
| Aurora Optoelectronics |
| Guangzhou Tinci Materials |
Aurora Optoelectronics and Guangzhou Tinci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Optoelectronics and Guangzhou Tinci
The main advantage of trading using opposite Aurora Optoelectronics and Guangzhou Tinci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Optoelectronics position performs unexpectedly, Guangzhou Tinci 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 Tinci will offset losses from the drop in Guangzhou Tinci's long position.The idea behind Aurora Optoelectronics Co and Guangzhou Tinci Materials 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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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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