Correlation Between Industrial and Guangdong Electric
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By analyzing existing cross correlation between Industrial and Commercial and Guangdong Electric Power, you can compare the effects of market volatilities on Industrial and Guangdong Electric 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 Industrial with a short position of Guangdong Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial and Guangdong Electric.
Diversification Opportunities for Industrial and Guangdong Electric
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Industrial and Guangdong is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Guangdong Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Electric Power and Industrial 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 Industrial and Commercial are associated (or correlated) with Guangdong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Electric Power has no effect on the direction of Industrial i.e., Industrial and Guangdong Electric go up and down completely randomly.
Pair Corralation between Industrial and Guangdong Electric
Assuming the 90 days trading horizon Industrial and Commercial is expected to generate 2.26 times more return on investment than Guangdong Electric. However, Industrial is 2.26 times more volatile than Guangdong Electric Power. It trades about 0.47 of its potential returns per unit of risk. Guangdong Electric Power is currently generating about -0.04 per unit of risk. If you would invest 616.00 in Industrial and Commercial on September 27, 2024 and sell it today you would earn a total of 78.00 from holding Industrial and Commercial or generate 12.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Industrial and Commercial vs. Guangdong Electric Power
Performance |
| Timeline |
| Industrial and Commercial |
| Guangdong Electric Power |
Industrial and Guangdong Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial and Guangdong Electric
The main advantage of trading using opposite Industrial and Guangdong Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial position performs unexpectedly, Guangdong Electric 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 Guangdong Electric will offset losses from the drop in Guangdong Electric's long position.| Industrial vs. Kweichow Moutai Co | Industrial vs. Agricultural Bank of | Industrial vs. China Mobile Limited | Industrial vs. China Construction Bank |
| Guangdong Electric vs. Industrial and Commercial | Guangdong Electric vs. Agricultural Bank of | Guangdong Electric vs. China Construction Bank | Guangdong Electric vs. Bank of China |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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