Correlation Between Guangzhou Restaurants and Guangdong Wens
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By analyzing existing cross correlation between Guangzhou Restaurants Group and Guangdong Wens Foodstuff, you can compare the effects of market volatilities on Guangzhou Restaurants and Guangdong Wens 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 Guangdong Wens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Restaurants and Guangdong Wens.
Diversification Opportunities for Guangzhou Restaurants and Guangdong Wens
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangzhou and Guangdong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Restaurants Group and Guangdong Wens Foodstuff in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Wens Foodstuff 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 Guangdong Wens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Wens Foodstuff has no effect on the direction of Guangzhou Restaurants i.e., Guangzhou Restaurants and Guangdong Wens go up and down completely randomly.
Pair Corralation between Guangzhou Restaurants and Guangdong Wens
Assuming the 90 days trading horizon Guangzhou Restaurants Group is expected to under-perform the Guangdong Wens. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou Restaurants Group is 1.02 times less risky than Guangdong Wens. The stock trades about -0.03 of its potential returns per unit of risk. The Guangdong Wens Foodstuff is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,824 in Guangdong Wens Foodstuff on September 3, 2024 and sell it today you would lose (90.00) from holding Guangdong Wens Foodstuff or give up 4.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Restaurants Group vs. Guangdong Wens Foodstuff
Performance |
| Timeline |
| Guangzhou Restaurants |
| Guangdong Wens Foodstuff |
Guangzhou Restaurants and Guangdong Wens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Restaurants and Guangdong Wens
The main advantage of trading using opposite Guangzhou Restaurants and Guangdong Wens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Restaurants position performs unexpectedly, Guangdong Wens 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 Wens will offset losses from the drop in Guangdong Wens' long position.| Guangzhou Restaurants vs. PetroChina Co Ltd | Guangzhou Restaurants vs. China Mobile Limited | Guangzhou Restaurants vs. Industrial and Commercial | Guangzhou Restaurants vs. China Life Insurance |
| Guangdong Wens vs. Beijing Wantai Biological | Guangdong Wens vs. Aluminum Corp of | Guangdong Wens vs. COL Digital Publishing | Guangdong Wens vs. Shaanxi Meineng Clean |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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