Correlation Between China Building and Guangdong Marubi
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By analyzing existing cross correlation between China Building Material and Guangdong Marubi Biotechnology, you can compare the effects of market volatilities on China Building and Guangdong Marubi 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 China Building with a short position of Guangdong Marubi. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Building and Guangdong Marubi.
Diversification Opportunities for China Building and Guangdong Marubi
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Guangdong is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding China Building Material and Guangdong Marubi Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Marubi Bio and China Building 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 China Building Material are associated (or correlated) with Guangdong Marubi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Marubi Bio has no effect on the direction of China Building i.e., China Building and Guangdong Marubi go up and down completely randomly.
Pair Corralation between China Building and Guangdong Marubi
Assuming the 90 days trading horizon China Building Material is expected to under-perform the Guangdong Marubi. In addition to that, China Building is 2.02 times more volatile than Guangdong Marubi Biotechnology. It trades about -0.08 of its total potential returns per unit of risk. Guangdong Marubi Biotechnology is currently generating about -0.01 per unit of volatility. If you would invest 4,160 in Guangdong Marubi Biotechnology on November 9, 2024 and sell it today you would lose (970.00) from holding Guangdong Marubi Biotechnology or give up 23.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 18.53% |
| Values | Daily Returns |
China Building Material vs. Guangdong Marubi Biotechnology
Performance |
| Timeline |
| China Building Material |
Risk-Adjusted Performance
Excellent
Weak | Strong |
| Guangdong Marubi Bio |
Risk-Adjusted Performance
Weak
Weak | Strong |
China Building and Guangdong Marubi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Building and Guangdong Marubi
The main advantage of trading using opposite China Building and Guangdong Marubi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Building position performs unexpectedly, Guangdong Marubi 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 Marubi will offset losses from the drop in Guangdong Marubi's long position.The idea behind China Building Material and Guangdong Marubi Biotechnology 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.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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