Correlation Between Guangdong Investment and Shui On
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Shui On 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 Shui On 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 Shui On Land, you can compare the effects of market volatilities on Guangdong Investment and Shui On 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 Shui On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Shui On.
Diversification Opportunities for Guangdong Investment and Shui On
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Shui is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Shui On Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shui On Land 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 Shui On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shui On Land has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Shui On go up and down completely randomly.
Pair Corralation between Guangdong Investment and Shui On
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 0.16 times more return on investment than Shui On. However, Guangdong Investment Limited is 6.39 times less risky than Shui On. It trades about 0.02 of its potential returns per unit of risk. Shui On Land is currently generating about -0.04 per unit of risk. If you would invest 67.00 in Guangdong Investment Limited on September 4, 2024 and sell it today you would lose (6.00) from holding Guangdong Investment Limited or give up 8.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 3.24% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Shui On Land
Performance |
| Timeline |
| Guangdong Investment |
| Shui On Land |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Guangdong Investment and Shui On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Shui On
The main advantage of trading using opposite Guangdong Investment and Shui On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Shui On 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 Shui On will offset losses from the drop in Shui On's long position.| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Guangdong Investment | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Beijing Enterprises Water |
| Shui On vs. Sensient Technologies | Shui On vs. MGIC Investment Corp | Shui On vs. CapitaLand Investment Limited | Shui On vs. Guangdong Investment Limited |
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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