Correlation Between Guangdong Investment and Primo Brands
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Primo Brands 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 Primo Brands 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 Primo Brands, you can compare the effects of market volatilities on Guangdong Investment and Primo Brands 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 Primo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Primo Brands.
Diversification Opportunities for Guangdong Investment and Primo Brands
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangdong and Primo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands 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 Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Primo Brands go up and down completely randomly.
Pair Corralation between Guangdong Investment and Primo Brands
Assuming the 90 days horizon Guangdong Investment Limited is expected to under-perform the Primo Brands. But the pink sheet apears to be less risky and, when comparing its historical volatility, Guangdong Investment Limited is 1.44 times less risky than Primo Brands. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Primo Brands is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,616 in Primo Brands on August 29, 2024 and sell it today you would earn a total of 215.00 from holding Primo Brands or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Primo Brands
Performance |
| Timeline |
| Guangdong Investment |
| Primo Brands |
Guangdong Investment and Primo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Primo Brands
The main advantage of trading using opposite Guangdong Investment and Primo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Primo Brands 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 Primo Brands will offset losses from the drop in Primo Brands' long position.| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Guangdong Investment | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Beijing Enterprises Water |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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