Correlation Between Guizhou BroadcastingTV and Chengdu Kanghua
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By analyzing existing cross correlation between Guizhou BroadcastingTV Info and Chengdu Kanghua Biological, you can compare the effects of market volatilities on Guizhou BroadcastingTV and Chengdu Kanghua 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 Kanghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guizhou BroadcastingTV and Chengdu Kanghua.
Diversification Opportunities for Guizhou BroadcastingTV and Chengdu Kanghua
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guizhou and Chengdu is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Guizhou BroadcastingTV Info and Chengdu Kanghua Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Kanghua Biol 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 Kanghua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Kanghua Biol has no effect on the direction of Guizhou BroadcastingTV i.e., Guizhou BroadcastingTV and Chengdu Kanghua go up and down completely randomly.
Pair Corralation between Guizhou BroadcastingTV and Chengdu Kanghua
Assuming the 90 days trading horizon Guizhou BroadcastingTV Info is expected to generate 0.95 times more return on investment than Chengdu Kanghua. However, Guizhou BroadcastingTV Info is 1.05 times less risky than Chengdu Kanghua. It trades about -0.01 of its potential returns per unit of risk. Chengdu Kanghua Biological is currently generating about -0.2 per unit of risk. If you would invest 975.00 in Guizhou BroadcastingTV Info on August 28, 2024 and sell it today you would lose (17.00) from holding Guizhou BroadcastingTV Info or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Guizhou BroadcastingTV Info vs. Chengdu Kanghua Biological
Performance |
| Timeline |
| Guizhou BroadcastingTV |
| Chengdu Kanghua Biol |
Guizhou BroadcastingTV and Chengdu Kanghua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guizhou BroadcastingTV and Chengdu Kanghua
The main advantage of trading using opposite Guizhou BroadcastingTV and Chengdu Kanghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guizhou BroadcastingTV position performs unexpectedly, Chengdu Kanghua 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 Kanghua will offset losses from the drop in Chengdu Kanghua's long position.The idea behind Guizhou BroadcastingTV Info and Chengdu Kanghua Biological 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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