Correlation Between Sanan Optoelectronics and Guangzhou Zhujiang
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By analyzing existing cross correlation between Sanan Optoelectronics Co and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on Sanan Optoelectronics and Guangzhou Zhujiang 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 Sanan Optoelectronics with a short position of Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanan Optoelectronics and Guangzhou Zhujiang.
Diversification Opportunities for Sanan Optoelectronics and Guangzhou Zhujiang
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sanan and Guangzhou is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sanan Optoelectronics Co and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang and Sanan 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 Sanan Optoelectronics Co are associated (or correlated) with Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Sanan Optoelectronics i.e., Sanan Optoelectronics and Guangzhou Zhujiang go up and down completely randomly.
Pair Corralation between Sanan Optoelectronics and Guangzhou Zhujiang
Assuming the 90 days trading horizon Sanan Optoelectronics is expected to generate 8.96 times less return on investment than Guangzhou Zhujiang. In addition to that, Sanan Optoelectronics is 1.24 times more volatile than Guangzhou Zhujiang Brewery. It trades about 0.01 of its total potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about 0.06 per unit of volatility. If you would invest 776.00 in Guangzhou Zhujiang Brewery on September 14, 2024 and sell it today you would earn a total of 203.00 from holding Guangzhou Zhujiang Brewery or generate 26.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanan Optoelectronics Co vs. Guangzhou Zhujiang Brewery
Performance |
| Timeline |
| Sanan Optoelectronics |
| Guangzhou Zhujiang |
Sanan Optoelectronics and Guangzhou Zhujiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanan Optoelectronics and Guangzhou Zhujiang
The main advantage of trading using opposite Sanan Optoelectronics and Guangzhou Zhujiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanan Optoelectronics position performs unexpectedly, Guangzhou Zhujiang 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 Zhujiang will offset losses from the drop in Guangzhou Zhujiang's long position.The idea behind Sanan Optoelectronics Co and Guangzhou Zhujiang Brewery 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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