Correlation Between China Galaxy and Galaxy Digital
Can any of the company-specific risk be diversified away by investing in both China Galaxy and Galaxy Digital 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 China Galaxy and Galaxy Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Galaxy Securities and Galaxy Digital Holdings, you can compare the effects of market volatilities on China Galaxy and Galaxy Digital 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 China Galaxy with a short position of Galaxy Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Galaxy and Galaxy Digital.
Diversification Opportunities for China Galaxy and Galaxy Digital
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Galaxy is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding China Galaxy Securities and Galaxy Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Digital Holdings and China Galaxy 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 China Galaxy Securities are associated (or correlated) with Galaxy Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Digital Holdings has no effect on the direction of China Galaxy i.e., China Galaxy and Galaxy Digital go up and down completely randomly.
Pair Corralation between China Galaxy and Galaxy Digital
Assuming the 90 days horizon China Galaxy is expected to generate 11.32 times less return on investment than Galaxy Digital. But when comparing it to its historical volatility, China Galaxy Securities is 2.45 times less risky than Galaxy Digital. It trades about 0.02 of its potential returns per unit of risk. Galaxy Digital Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 323.00 in Galaxy Digital Holdings on August 28, 2024 and sell it today you would earn a total of 1,397 from holding Galaxy Digital Holdings or generate 432.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.09% |
| Values | Daily Returns |
China Galaxy Securities vs. Galaxy Digital Holdings
Performance |
| Timeline |
| China Galaxy Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Galaxy Digital Holdings |
China Galaxy and Galaxy Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Galaxy and Galaxy Digital
The main advantage of trading using opposite China Galaxy and Galaxy Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Galaxy position performs unexpectedly, Galaxy Digital 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 Galaxy Digital will offset losses from the drop in Galaxy Digital's long position.| China Galaxy vs. Evercore Partners | China Galaxy vs. Lazard | China Galaxy vs. Moelis Co | China Galaxy vs. PJT Partners |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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