Correlation Between Guangzhou Restaurants and Glodon Software
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By analyzing existing cross correlation between Guangzhou Restaurants Group and Glodon Software Co, you can compare the effects of market volatilities on Guangzhou Restaurants and Glodon Software 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 Glodon Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Restaurants and Glodon Software.
Diversification Opportunities for Guangzhou Restaurants and Glodon Software
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangzhou and Glodon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Restaurants Group and Glodon Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glodon Software 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 Glodon Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glodon Software has no effect on the direction of Guangzhou Restaurants i.e., Guangzhou Restaurants and Glodon Software go up and down completely randomly.
Pair Corralation between Guangzhou Restaurants and Glodon Software
Assuming the 90 days trading horizon Guangzhou Restaurants Group is expected to generate 0.72 times more return on investment than Glodon Software. However, Guangzhou Restaurants Group is 1.38 times less risky than Glodon Software. It trades about -0.04 of its potential returns per unit of risk. Glodon Software Co is currently generating about -0.1 per unit of risk. If you would invest 1,660 in Guangzhou Restaurants Group on November 6, 2024 and sell it today you would lose (92.00) from holding Guangzhou Restaurants Group or give up 5.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Restaurants Group vs. Glodon Software Co
Performance |
| Timeline |
| Guangzhou Restaurants |
| Glodon Software |
Guangzhou Restaurants and Glodon Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Restaurants and Glodon Software
The main advantage of trading using opposite Guangzhou Restaurants and Glodon Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Restaurants position performs unexpectedly, Glodon Software 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 Glodon Software will offset losses from the drop in Glodon Software's long position.The idea behind Guangzhou Restaurants Group and Glodon Software Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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