Correlation Between Guangdong Investment and Black Hills
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Black Hills 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 Black Hills 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 Black Hills, you can compare the effects of market volatilities on Guangdong Investment and Black Hills 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 Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Black Hills.
Diversification Opportunities for Guangdong Investment and Black Hills
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and Black is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Black Hills go up and down completely randomly.
Pair Corralation between Guangdong Investment and Black Hills
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 4.44 times more return on investment than Black Hills. However, Guangdong Investment is 4.44 times more volatile than Black Hills. It trades about 0.04 of its potential returns per unit of risk. Black Hills is currently generating about 0.05 per unit of risk. If you would invest 67.00 in Guangdong Investment Limited on September 14, 2024 and sell it today you would earn a total of 16.00 from holding Guangdong Investment Limited or generate 23.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Black Hills
Performance |
| Timeline |
| Guangdong Investment |
| Black Hills |
Guangdong Investment and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Black Hills
The main advantage of trading using opposite Guangdong Investment and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| Guangdong Investment vs. Artesian Resources | Guangdong Investment vs. Global Water Resources | Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. American Water Works |
| Black Hills vs. NewJersey Resources | Black Hills vs. Northwest Natural Gas | Black Hills vs. Spire Inc | Black Hills vs. Chesapeake Utilities |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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