Correlation Between Gome Telecom and Guangxi Wuzhou
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By analyzing existing cross correlation between Gome Telecom Equipment and Guangxi Wuzhou Communications, you can compare the effects of market volatilities on Gome Telecom and Guangxi Wuzhou 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 Gome Telecom with a short position of Guangxi Wuzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gome Telecom and Guangxi Wuzhou.
Diversification Opportunities for Gome Telecom and Guangxi Wuzhou
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gome and Guangxi is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Gome Telecom Equipment and Guangxi Wuzhou Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangxi Wuzhou Commu and Gome Telecom 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 Gome Telecom Equipment are associated (or correlated) with Guangxi Wuzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangxi Wuzhou Commu has no effect on the direction of Gome Telecom i.e., Gome Telecom and Guangxi Wuzhou go up and down completely randomly.
Pair Corralation between Gome Telecom and Guangxi Wuzhou
Assuming the 90 days trading horizon Gome Telecom Equipment is expected to generate 2.4 times more return on investment than Guangxi Wuzhou. However, Gome Telecom is 2.4 times more volatile than Guangxi Wuzhou Communications. It trades about 0.18 of its potential returns per unit of risk. Guangxi Wuzhou Communications is currently generating about 0.15 per unit of risk. If you would invest 168.00 in Gome Telecom Equipment on September 4, 2024 and sell it today you would earn a total of 22.00 from holding Gome Telecom Equipment or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gome Telecom Equipment vs. Guangxi Wuzhou Communications
Performance |
| Timeline |
| Gome Telecom Equipment |
| Guangxi Wuzhou Commu |
Gome Telecom and Guangxi Wuzhou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gome Telecom and Guangxi Wuzhou
The main advantage of trading using opposite Gome Telecom and Guangxi Wuzhou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gome Telecom position performs unexpectedly, Guangxi Wuzhou 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 Guangxi Wuzhou will offset losses from the drop in Guangxi Wuzhou's long position.| Gome Telecom vs. Biwin Storage Technology | Gome Telecom vs. PetroChina Co Ltd | Gome Telecom vs. Industrial and Commercial | Gome Telecom vs. China Construction Bank |
| Guangxi Wuzhou vs. China State Construction | Guangxi Wuzhou vs. Poly Real Estate | Guangxi Wuzhou vs. China Vanke Co | Guangxi Wuzhou vs. China Merchants Shekou |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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