Correlation Between China State and Guangzhou Shangpin
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By analyzing existing cross correlation between China State Construction and Guangzhou Shangpin Home, you can compare the effects of market volatilities on China State and Guangzhou Shangpin 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 China State with a short position of Guangzhou Shangpin. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Guangzhou Shangpin.
Diversification Opportunities for China State and Guangzhou Shangpin
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Guangzhou is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Guangzhou Shangpin Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Shangpin Home and China State 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 China State Construction are associated (or correlated) with Guangzhou Shangpin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Shangpin Home has no effect on the direction of China State i.e., China State and Guangzhou Shangpin go up and down completely randomly.
Pair Corralation between China State and Guangzhou Shangpin
Assuming the 90 days trading horizon China State Construction is expected to under-perform the Guangzhou Shangpin. But the stock apears to be less risky and, when comparing its historical volatility, China State Construction is 1.18 times less risky than Guangzhou Shangpin. The stock trades about -0.11 of its potential returns per unit of risk. The Guangzhou Shangpin Home is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,354 in Guangzhou Shangpin Home on August 26, 2024 and sell it today you would lose (25.00) from holding Guangzhou Shangpin Home or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. Guangzhou Shangpin Home
Performance |
| Timeline |
| China State Construction |
| Guangzhou Shangpin Home |
China State and Guangzhou Shangpin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Guangzhou Shangpin
The main advantage of trading using opposite China State and Guangzhou Shangpin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, Guangzhou Shangpin 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 Guangzhou Shangpin will offset losses from the drop in Guangzhou Shangpin's long position.| China State vs. Tongxing Environmental Protection | China State vs. Youyou Foods Co | China State vs. Shantou Wanshun Package | China State vs. Suzhou Weizhixiang Food |
| Guangzhou Shangpin vs. China Petroleum Chemical | Guangzhou Shangpin vs. PetroChina Co Ltd | Guangzhou Shangpin vs. China State Construction | Guangzhou Shangpin vs. China Railway Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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