Correlation Between CHINA TONTINE and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE 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 CHINA TONTINE and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TONTINE WINES and Guangdong Investment Limited, you can compare the effects of market volatilities on CHINA TONTINE 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 CHINA TONTINE with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and Guangdong Investment.
Diversification Opportunities for CHINA TONTINE and Guangdong Investment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and Guangdong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and CHINA TONTINE 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 TONTINE WINES 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 CHINA TONTINE i.e., CHINA TONTINE and Guangdong Investment go up and down completely randomly.
Pair Corralation between CHINA TONTINE and Guangdong Investment
Assuming the 90 days trading horizon CHINA TONTINE WINES is expected to generate 5.69 times more return on investment than Guangdong Investment. However, CHINA TONTINE is 5.69 times more volatile than Guangdong Investment Limited. It trades about 0.04 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about 0.07 per unit of risk. If you would invest 0.70 in CHINA TONTINE WINES on November 7, 2024 and sell it today you would earn a total of 6.30 from holding CHINA TONTINE WINES or generate 900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA TONTINE WINES vs. Guangdong Investment Limited
Performance |
| Timeline |
| CHINA TONTINE WINES |
| Guangdong Investment |
CHINA TONTINE and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TONTINE and Guangdong Investment
The main advantage of trading using opposite CHINA TONTINE and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE 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.| CHINA TONTINE vs. DAIRY FARM INTL | CHINA TONTINE vs. Applied Materials | CHINA TONTINE vs. Federal Agricultural Mortgage | CHINA TONTINE vs. The Yokohama Rubber |
| Guangdong Investment vs. International Consolidated Airlines | Guangdong Investment vs. Sixt Leasing SE | Guangdong Investment vs. SOUTHWEST AIRLINES | Guangdong Investment vs. United Rentals |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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