Correlation Between TT Electronics and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both TT Electronics and Guangdong Investment 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 TT Electronics and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and Guangdong Investment Limited, you can compare the effects of market volatilities on TT Electronics and Guangdong Investment 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 TT Electronics with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and Guangdong Investment.
Diversification Opportunities for TT Electronics and Guangdong Investment
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 7TT and Guangdong is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and TT Electronics 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 TT Electronics PLC are associated (or correlated) with Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of TT Electronics i.e., TT Electronics and Guangdong Investment go up and down completely randomly.
Pair Corralation between TT Electronics and Guangdong Investment
Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the Guangdong Investment. But the stock apears to be less risky and, when comparing its historical volatility, TT Electronics PLC is 2.44 times less risky than Guangdong Investment. The stock trades about -0.01 of its potential returns per unit of risk. The Guangdong Investment Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Guangdong Investment Limited on October 13, 2024 and sell it today you would earn a total of 55.00 from holding Guangdong Investment Limited or generate 343.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. Guangdong Investment Limited
Performance |
| Timeline |
| TT Electronics PLC |
| Guangdong Investment |
TT Electronics and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and Guangdong Investment
The main advantage of trading using opposite TT Electronics and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics position performs unexpectedly, Guangdong Investment 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 Investment will offset losses from the drop in Guangdong Investment's long position.| TT Electronics vs. Japan Asia Investment | TT Electronics vs. Virtus Investment Partners | TT Electronics vs. ECHO INVESTMENT ZY | TT Electronics vs. SEI INVESTMENTS |
| Guangdong Investment vs. SOLSTAD OFFSHORE NK | Guangdong Investment vs. TT Electronics PLC | Guangdong Investment vs. Suntory Beverage Food | Guangdong Investment vs. Delta Electronics Public |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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