Correlation Between Guizhou BroadcastingTV and Chengdu Xingrong
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By analyzing existing cross correlation between Guizhou BroadcastingTV Info and Chengdu Xingrong Investment, you can compare the effects of market volatilities on Guizhou BroadcastingTV and Chengdu Xingrong 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 Guizhou BroadcastingTV with a short position of Chengdu Xingrong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guizhou BroadcastingTV and Chengdu Xingrong.
Diversification Opportunities for Guizhou BroadcastingTV and Chengdu Xingrong
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guizhou and Chengdu is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Guizhou BroadcastingTV Info and Chengdu Xingrong Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Xingrong Inv and Guizhou BroadcastingTV 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 Guizhou BroadcastingTV Info are associated (or correlated) with Chengdu Xingrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Xingrong Inv has no effect on the direction of Guizhou BroadcastingTV i.e., Guizhou BroadcastingTV and Chengdu Xingrong go up and down completely randomly.
Pair Corralation between Guizhou BroadcastingTV and Chengdu Xingrong
Assuming the 90 days trading horizon Guizhou BroadcastingTV is expected to generate 10.51 times less return on investment than Chengdu Xingrong. In addition to that, Guizhou BroadcastingTV is 1.77 times more volatile than Chengdu Xingrong Investment. It trades about 0.0 of its total potential returns per unit of risk. Chengdu Xingrong Investment is currently generating about 0.06 per unit of volatility. If you would invest 465.00 in Chengdu Xingrong Investment on September 12, 2024 and sell it today you would earn a total of 248.00 from holding Chengdu Xingrong Investment or generate 53.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guizhou BroadcastingTV Info vs. Chengdu Xingrong Investment
Performance |
| Timeline |
| Guizhou BroadcastingTV |
| Chengdu Xingrong Inv |
Guizhou BroadcastingTV and Chengdu Xingrong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guizhou BroadcastingTV and Chengdu Xingrong
The main advantage of trading using opposite Guizhou BroadcastingTV and Chengdu Xingrong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guizhou BroadcastingTV position performs unexpectedly, Chengdu Xingrong 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 Chengdu Xingrong will offset losses from the drop in Chengdu Xingrong's long position.The idea behind Guizhou BroadcastingTV Info and Chengdu Xingrong Investment 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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