Correlation Between Guangzhou Restaurants and Northern United
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By analyzing existing cross correlation between Guangzhou Restaurants Group and Northern United Publishing, you can compare the effects of market volatilities on Guangzhou Restaurants and Northern United 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 Northern United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Restaurants and Northern United.
Diversification Opportunities for Guangzhou Restaurants and Northern United
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangzhou and Northern is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Restaurants Group and Northern United Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern United Publ 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 Northern United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern United Publ has no effect on the direction of Guangzhou Restaurants i.e., Guangzhou Restaurants and Northern United go up and down completely randomly.
Pair Corralation between Guangzhou Restaurants and Northern United
Assuming the 90 days trading horizon Guangzhou Restaurants Group is expected to under-perform the Northern United. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou Restaurants Group is 1.56 times less risky than Northern United. The stock trades about -0.04 of its potential returns per unit of risk. The Northern United Publishing is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 627.00 in Northern United Publishing on November 2, 2024 and sell it today you would earn a total of 25.00 from holding Northern United Publishing or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Restaurants Group vs. Northern United Publishing
Performance |
| Timeline |
| Guangzhou Restaurants |
| Northern United Publ |
Guangzhou Restaurants and Northern United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Restaurants and Northern United
The main advantage of trading using opposite Guangzhou Restaurants and Northern United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Restaurants position performs unexpectedly, Northern United 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 Northern United will offset losses from the drop in Northern United's long position.The idea behind Guangzhou Restaurants Group and Northern United Publishing 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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