Correlation Between Guangzhou Fangbang and Industrial

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Can any of the company-specific risk be diversified away by investing in both Guangzhou Fangbang and Industrial 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 Guangzhou Fangbang and Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangzhou Fangbang Electronics and Industrial and Commercial, you can compare the effects of market volatilities on Guangzhou Fangbang and Industrial 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 Fangbang with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Fangbang and Industrial.

Diversification Opportunities for Guangzhou Fangbang and Industrial

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Guangzhou and Industrial is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Fangbang Electronics and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Guangzhou Fangbang 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 Fangbang Electronics are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Guangzhou Fangbang i.e., Guangzhou Fangbang and Industrial go up and down completely randomly.

Pair Corralation between Guangzhou Fangbang and Industrial

Assuming the 90 days trading horizon Guangzhou Fangbang Electronics is expected to under-perform the Industrial. In addition to that, Guangzhou Fangbang is 2.83 times more volatile than Industrial and Commercial. It trades about -0.02 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about 0.08 per unit of volatility. If you would invest  626.00  in Industrial and Commercial on October 15, 2024 and sell it today you would earn a total of  34.00  from holding Industrial and Commercial or generate 5.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Guangzhou Fangbang Electronics  vs.  Industrial and Commercial

 Performance 
       Timeline  
Guangzhou Fangbang 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Guangzhou Fangbang Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangzhou Fangbang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Industrial and Commercial 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guangzhou Fangbang and Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guangzhou Fangbang and Industrial

The main advantage of trading using opposite Guangzhou Fangbang and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Fangbang position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.
The idea behind Guangzhou Fangbang Electronics and Industrial and Commercial 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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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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