Correlation Between Guangdong Investment and United Parks
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and United Parks 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 United Parks 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 United Parks Resorts, you can compare the effects of market volatilities on Guangdong Investment and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and United Parks.
Diversification Opportunities for Guangdong Investment and United Parks
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and United is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and United Parks go up and down completely randomly.
Pair Corralation between Guangdong Investment and United Parks
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 0.16 times more return on investment than United Parks. However, Guangdong Investment Limited is 6.18 times less risky than United Parks. It trades about 0.23 of its potential returns per unit of risk. United Parks Resorts is currently generating about -0.19 per unit of risk. If you would invest 79.00 in Guangdong Investment Limited on October 28, 2024 and sell it today you would earn a total of 1.00 from holding Guangdong Investment Limited or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. United Parks Resorts
Performance |
| Timeline |
| Guangdong Investment |
| United Parks Resorts |
Guangdong Investment and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and United Parks
The main advantage of trading using opposite Guangdong Investment and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Guangdong Investment | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Beijing Enterprises Water |
| United Parks vs. Micron Technology | United Parks vs. Mangazeya Mining | United Parks vs. Vulcan Materials | United Parks vs. Teradyne |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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