Correlation Between Anhui Conch and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both Anhui Conch 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 Anhui Conch and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anhui Conch Cement and Guangdong Investment, you can compare the effects of market volatilities on Anhui Conch 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 Anhui Conch with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Conch and Guangdong Investment.
Diversification Opportunities for Anhui Conch and Guangdong Investment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Anhui and Guangdong is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Conch Cement and Guangdong Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and Anhui Conch 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 Anhui Conch Cement 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 Anhui Conch i.e., Anhui Conch and Guangdong Investment go up and down completely randomly.
Pair Corralation between Anhui Conch and Guangdong Investment
Assuming the 90 days horizon Anhui Conch Cement is expected to generate 0.67 times more return on investment than Guangdong Investment. However, Anhui Conch Cement is 1.49 times less risky than Guangdong Investment. It trades about 0.0 of its potential returns per unit of risk. Guangdong Investment is currently generating about -0.01 per unit of risk. If you would invest 1,569 in Anhui Conch Cement on August 27, 2024 and sell it today you would lose (245.00) from holding Anhui Conch Cement or give up 15.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 93.85% |
| Values | Daily Returns |
Anhui Conch Cement vs. Guangdong Investment
Performance |
| Timeline |
| Anhui Conch Cement |
| Guangdong Investment |
Anhui Conch and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anhui Conch and Guangdong Investment
The main advantage of trading using opposite Anhui Conch and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Conch 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.| Anhui Conch vs. Buzzi Unicem SpA | Anhui Conch vs. Wienerberger Baustoffindustrie | Anhui Conch vs. Lafargeholcim Ltd ADR | Anhui Conch vs. HeidelbergCement AG ADR |
| Guangdong Investment vs. Artesian Resources | Guangdong Investment vs. Global Water Resources | Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. American Water Works |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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