Correlation Between Guangzhou Restaurants and Agricultural Bank
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By analyzing existing cross correlation between Guangzhou Restaurants Group and Agricultural Bank of, you can compare the effects of market volatilities on Guangzhou Restaurants and Agricultural Bank 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 Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Restaurants and Agricultural Bank.
Diversification Opportunities for Guangzhou Restaurants and Agricultural Bank
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangzhou and Agricultural is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Restaurants Group and Agricultural Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Guangzhou Restaurants i.e., Guangzhou Restaurants and Agricultural Bank go up and down completely randomly.
Pair Corralation between Guangzhou Restaurants and Agricultural Bank
Assuming the 90 days trading horizon Guangzhou Restaurants is expected to generate 1.59 times less return on investment than Agricultural Bank. In addition to that, Guangzhou Restaurants is 1.99 times more volatile than Agricultural Bank of. It trades about 0.12 of its total potential returns per unit of risk. Agricultural Bank of is currently generating about 0.39 per unit of volatility. If you would invest 485.00 in Agricultural Bank of on September 29, 2024 and sell it today you would earn a total of 46.00 from holding Agricultural Bank of or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Restaurants Group vs. Agricultural Bank of
Performance |
| Timeline |
| Guangzhou Restaurants |
| Agricultural Bank |
Guangzhou Restaurants and Agricultural Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Restaurants and Agricultural Bank
The main advantage of trading using opposite Guangzhou Restaurants and Agricultural Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Restaurants position performs unexpectedly, Agricultural Bank 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 Agricultural Bank will offset losses from the drop in Agricultural Bank's long position.The idea behind Guangzhou Restaurants Group and Agricultural Bank of 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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