Correlation Between Guangdong Investment and Cumulus Media
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Cumulus Media 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 Cumulus Media 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 Cumulus Media Class, you can compare the effects of market volatilities on Guangdong Investment and Cumulus Media 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 Cumulus Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Cumulus Media.
Diversification Opportunities for Guangdong Investment and Cumulus Media
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and Cumulus is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Cumulus Media Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumulus Media Class 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 Cumulus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumulus Media Class has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Cumulus Media go up and down completely randomly.
Pair Corralation between Guangdong Investment and Cumulus Media
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 1.77 times more return on investment than Cumulus Media. However, Guangdong Investment is 1.77 times more volatile than Cumulus Media Class. It trades about 0.03 of its potential returns per unit of risk. Cumulus Media Class is currently generating about -0.08 per unit of risk. If you would invest 95.00 in Guangdong Investment Limited on September 2, 2024 and sell it today you would lose (34.00) from holding Guangdong Investment Limited or give up 35.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Cumulus Media Class
Performance |
| Timeline |
| Guangdong Investment |
| Cumulus Media Class |
Guangdong Investment and Cumulus Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Cumulus Media
The main advantage of trading using opposite Guangdong Investment and Cumulus Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Cumulus Media 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 Cumulus Media will offset losses from the drop in Cumulus Media's long position.| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Endesa SA ADR | Guangdong Investment vs. HUMANA INC |
| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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