Correlation Between Guangzhou Restaurants and Xiangtan Electrochemical
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By analyzing existing cross correlation between Guangzhou Restaurants Group and Xiangtan Electrochemical Scientific, you can compare the effects of market volatilities on Guangzhou Restaurants and Xiangtan Electrochemical 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 Guangzhou Restaurants with a short position of Xiangtan Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Restaurants and Xiangtan Electrochemical.
Diversification Opportunities for Guangzhou Restaurants and Xiangtan Electrochemical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangzhou and Xiangtan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Restaurants Group and Xiangtan Electrochemical Scien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangtan Electrochemical and Guangzhou Restaurants 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 Guangzhou Restaurants Group are associated (or correlated) with Xiangtan Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangtan Electrochemical has no effect on the direction of Guangzhou Restaurants i.e., Guangzhou Restaurants and Xiangtan Electrochemical go up and down completely randomly.
Pair Corralation between Guangzhou Restaurants and Xiangtan Electrochemical
Assuming the 90 days trading horizon Guangzhou Restaurants is expected to generate 3.33 times less return on investment than Xiangtan Electrochemical. But when comparing it to its historical volatility, Guangzhou Restaurants Group is 1.9 times less risky than Xiangtan Electrochemical. It trades about 0.09 of its potential returns per unit of risk. Xiangtan Electrochemical Scientific is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,043 in Xiangtan Electrochemical Scientific on September 1, 2024 and sell it today you would earn a total of 116.00 from holding Xiangtan Electrochemical Scientific or generate 11.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Restaurants Group vs. Xiangtan Electrochemical Scien
Performance |
| Timeline |
| Guangzhou Restaurants |
| Xiangtan Electrochemical |
Guangzhou Restaurants and Xiangtan Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Restaurants and Xiangtan Electrochemical
The main advantage of trading using opposite Guangzhou Restaurants and Xiangtan Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Restaurants position performs unexpectedly, Xiangtan Electrochemical 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 Xiangtan Electrochemical will offset losses from the drop in Xiangtan Electrochemical's long position.| Guangzhou Restaurants vs. China State Construction | Guangzhou Restaurants vs. Poly Real Estate | Guangzhou Restaurants vs. China Vanke Co | Guangzhou Restaurants vs. China Merchants Shekou |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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