Correlation Between Galaxy Software and CHINA DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both Galaxy Software and CHINA DEVELOPMENT at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Galaxy Software and CHINA DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galaxy Software Services and CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on Galaxy Software and CHINA DEVELOPMENT 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 Galaxy Software with a short position of CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Software and CHINA DEVELOPMENT.
Diversification Opportunities for Galaxy Software and CHINA DEVELOPMENT
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Galaxy and CHINA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Software Services and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT and Galaxy Software 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 Galaxy Software Services are associated (or correlated) with CHINA DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA DEVELOPMENT has no effect on the direction of Galaxy Software i.e., Galaxy Software and CHINA DEVELOPMENT go up and down completely randomly.
Pair Corralation between Galaxy Software and CHINA DEVELOPMENT
Assuming the 90 days trading horizon Galaxy Software Services is expected to generate 109.51 times more return on investment than CHINA DEVELOPMENT. However, Galaxy Software is 109.51 times more volatile than CHINA DEVELOPMENT FINANCIAL. It trades about 0.05 of its potential returns per unit of risk. CHINA DEVELOPMENT FINANCIAL is currently generating about 0.09 per unit of risk. If you would invest 12,640 in Galaxy Software Services on September 2, 2024 and sell it today you would lose (690.00) from holding Galaxy Software Services or give up 5.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galaxy Software Services vs. CHINA DEVELOPMENT FINANCIAL
Performance |
| Timeline |
| Galaxy Software Services |
| CHINA DEVELOPMENT |
Galaxy Software and CHINA DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galaxy Software and CHINA DEVELOPMENT
The main advantage of trading using opposite Galaxy Software and CHINA DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galaxy Software position performs unexpectedly, CHINA DEVELOPMENT 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 CHINA DEVELOPMENT will offset losses from the drop in CHINA DEVELOPMENT's long position.| Galaxy Software vs. Foxconn Technology Co | Galaxy Software vs. FocalTech Systems Co | Galaxy Software vs. Sesoda Corp | Galaxy Software vs. Wah Hong Industrial |
| CHINA DEVELOPMENT vs. Fubon Financial Holding | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Mid Cap | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Electronics | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Top |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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