Correlation Between Guangdong Investment and Brickell Biotech
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Brickell Biotech 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 Guangdong Investment and Brickell Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Brickell Biotech, you can compare the effects of market volatilities on Guangdong Investment and Brickell Biotech 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 Guangdong Investment with a short position of Brickell Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Brickell Biotech.
Diversification Opportunities for Guangdong Investment and Brickell Biotech
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Guangdong and Brickell is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Brickell Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brickell Biotech and Guangdong Investment 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 Guangdong Investment Limited are associated (or correlated) with Brickell Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickell Biotech has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Brickell Biotech go up and down completely randomly.
Pair Corralation between Guangdong Investment and Brickell Biotech
If you would invest 179.00 in Brickell Biotech on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Brickell Biotech or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Brickell Biotech
Performance |
| Timeline |
| Guangdong Investment |
| Brickell Biotech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Guangdong Investment and Brickell Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Brickell Biotech
The main advantage of trading using opposite Guangdong Investment and Brickell Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Brickell Biotech 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 Brickell Biotech will offset losses from the drop in Brickell Biotech's long position.| Guangdong Investment vs. Artesian Resources | Guangdong Investment vs. Global Water Resources | Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. American Water Works |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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