Correlation Between Guangdong Liantai and Eastern Communications
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By analyzing existing cross correlation between Guangdong Liantai Environmental and Eastern Communications Co, you can compare the effects of market volatilities on Guangdong Liantai and Eastern Communications 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 Liantai with a short position of Eastern Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Liantai and Eastern Communications.
Diversification Opportunities for Guangdong Liantai and Eastern Communications
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Eastern is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Liantai Environmenta and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications and Guangdong Liantai 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 Liantai Environmental are associated (or correlated) with Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of Guangdong Liantai i.e., Guangdong Liantai and Eastern Communications go up and down completely randomly.
Pair Corralation between Guangdong Liantai and Eastern Communications
Assuming the 90 days trading horizon Guangdong Liantai Environmental is expected to under-perform the Eastern Communications. But the stock apears to be less risky and, when comparing its historical volatility, Guangdong Liantai Environmental is 1.14 times less risky than Eastern Communications. The stock trades about -0.4 of its potential returns per unit of risk. The Eastern Communications Co is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Eastern Communications Co on October 14, 2024 and sell it today you would lose (5.00) from holding Eastern Communications Co or give up 11.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Liantai Environmenta vs. Eastern Communications Co
Performance |
| Timeline |
| Guangdong Liantai |
| Eastern Communications |
Guangdong Liantai and Eastern Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Liantai and Eastern Communications
The main advantage of trading using opposite Guangdong Liantai and Eastern Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Liantai position performs unexpectedly, Eastern Communications 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 Eastern Communications will offset losses from the drop in Eastern Communications' long position.| Guangdong Liantai vs. Shenzhen MYS Environmental | Guangdong Liantai vs. AVIC Fund Management | Guangdong Liantai vs. Rongan Property Co | Guangdong Liantai vs. Haoxiangni Jujube Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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