Correlation Between Guangzhou Restaurants and Zhejiang Yayi
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By analyzing existing cross correlation between Guangzhou Restaurants Group and Zhejiang Yayi Metal, you can compare the effects of market volatilities on Guangzhou Restaurants and Zhejiang Yayi 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 Zhejiang Yayi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Restaurants and Zhejiang Yayi.
Diversification Opportunities for Guangzhou Restaurants and Zhejiang Yayi
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangzhou and Zhejiang is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Restaurants Group and Zhejiang Yayi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Yayi Metal 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 Zhejiang Yayi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Yayi Metal has no effect on the direction of Guangzhou Restaurants i.e., Guangzhou Restaurants and Zhejiang Yayi go up and down completely randomly.
Pair Corralation between Guangzhou Restaurants and Zhejiang Yayi
Assuming the 90 days trading horizon Guangzhou Restaurants Group is expected to under-perform the Zhejiang Yayi. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou Restaurants Group is 1.83 times less risky than Zhejiang Yayi. The stock trades about -0.04 of its potential returns per unit of risk. The Zhejiang Yayi Metal is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,862 in Zhejiang Yayi Metal on October 31, 2024 and sell it today you would lose (484.00) from holding Zhejiang Yayi Metal or give up 16.91% 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. Zhejiang Yayi Metal
Performance |
| Timeline |
| Guangzhou Restaurants |
| Zhejiang Yayi Metal |
Guangzhou Restaurants and Zhejiang Yayi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Restaurants and Zhejiang Yayi
The main advantage of trading using opposite Guangzhou Restaurants and Zhejiang Yayi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Restaurants position performs unexpectedly, Zhejiang Yayi 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 Zhejiang Yayi will offset losses from the drop in Zhejiang Yayi's long position.The idea behind Guangzhou Restaurants Group and Zhejiang Yayi Metal 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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