Correlation Between Gome Telecom and Liaoning Chengda
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By analyzing existing cross correlation between Gome Telecom Equipment and Liaoning Chengda Biotechnology, you can compare the effects of market volatilities on Gome Telecom and Liaoning Chengda 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 Liaoning Chengda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gome Telecom and Liaoning Chengda.
Diversification Opportunities for Gome Telecom and Liaoning Chengda
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gome and Liaoning is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gome Telecom Equipment and Liaoning Chengda Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Chengda Bio 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 Liaoning Chengda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Chengda Bio has no effect on the direction of Gome Telecom i.e., Gome Telecom and Liaoning Chengda go up and down completely randomly.
Pair Corralation between Gome Telecom and Liaoning Chengda
Assuming the 90 days trading horizon Gome Telecom Equipment is expected to generate 2.22 times more return on investment than Liaoning Chengda. However, Gome Telecom is 2.22 times more volatile than Liaoning Chengda Biotechnology. It trades about -0.01 of its potential returns per unit of risk. Liaoning Chengda Biotechnology is currently generating about -0.09 per unit of risk. If you would invest 185.00 in Gome Telecom Equipment on September 12, 2024 and sell it today you would lose (3.00) from holding Gome Telecom Equipment or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gome Telecom Equipment vs. Liaoning Chengda Biotechnology
Performance |
| Timeline |
| Gome Telecom Equipment |
| Liaoning Chengda Bio |
Gome Telecom and Liaoning Chengda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gome Telecom and Liaoning Chengda
The main advantage of trading using opposite Gome Telecom and Liaoning Chengda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gome Telecom position performs unexpectedly, Liaoning Chengda 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 Liaoning Chengda will offset losses from the drop in Liaoning Chengda's long position.| Gome Telecom vs. Lutian Machinery Co | Gome Telecom vs. PetroChina Co Ltd | Gome Telecom vs. Bank of China | Gome Telecom vs. Gansu Jiu Steel |
| Liaoning Chengda vs. Cultural Investment Holdings | Liaoning Chengda vs. Gome Telecom Equipment | Liaoning Chengda vs. Holitech Technology Co | Liaoning Chengda vs. Zotye Automobile Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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