Correlation Between Guangdong Ellington and Zhejiang Construction
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By analyzing existing cross correlation between Guangdong Ellington Electronics and Zhejiang Construction Investment, you can compare the effects of market volatilities on Guangdong Ellington and Zhejiang Construction 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 Guangdong Ellington with a short position of Zhejiang Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Ellington and Zhejiang Construction.
Diversification Opportunities for Guangdong Ellington and Zhejiang Construction
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangdong and Zhejiang is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Ellington Electronic and Zhejiang Construction Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Construction and Guangdong Ellington 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 Guangdong Ellington Electronics are associated (or correlated) with Zhejiang Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Construction has no effect on the direction of Guangdong Ellington i.e., Guangdong Ellington and Zhejiang Construction go up and down completely randomly.
Pair Corralation between Guangdong Ellington and Zhejiang Construction
Assuming the 90 days trading horizon Guangdong Ellington Electronics is expected to generate 1.12 times more return on investment than Zhejiang Construction. However, Guangdong Ellington is 1.12 times more volatile than Zhejiang Construction Investment. It trades about 0.11 of its potential returns per unit of risk. Zhejiang Construction Investment is currently generating about -0.35 per unit of risk. If you would invest 906.00 in Guangdong Ellington Electronics on October 23, 2024 and sell it today you would earn a total of 117.00 from holding Guangdong Ellington Electronics or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Ellington Electronic vs. Zhejiang Construction Investme
Performance |
| Timeline |
| Guangdong Ellington |
| Zhejiang Construction |
Guangdong Ellington and Zhejiang Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Ellington and Zhejiang Construction
The main advantage of trading using opposite Guangdong Ellington and Zhejiang Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Ellington position performs unexpectedly, Zhejiang Construction 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 Construction will offset losses from the drop in Zhejiang Construction's long position.The idea behind Guangdong Ellington Electronics and Zhejiang Construction Investment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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