Correlation Between Global Electrical and Song Hong
Can any of the company-specific risk be diversified away by investing in both Global Electrical and Song Hong 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 Global Electrical and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Electrical Technology and Song Hong Garment, you can compare the effects of market volatilities on Global Electrical and Song Hong 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 Global Electrical with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Electrical and Song Hong.
Diversification Opportunities for Global Electrical and Song Hong
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Song is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Global Electrical Technology and Song Hong Garment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Garment and Global Electrical 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 Global Electrical Technology are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Garment has no effect on the direction of Global Electrical i.e., Global Electrical and Song Hong go up and down completely randomly.
Pair Corralation between Global Electrical and Song Hong
Assuming the 90 days trading horizon Global Electrical Technology is expected to under-perform the Song Hong. In addition to that, Global Electrical is 3.99 times more volatile than Song Hong Garment. It trades about -0.05 of its total potential returns per unit of risk. Song Hong Garment is currently generating about 0.31 per unit of volatility. If you would invest 4,471,879 in Song Hong Garment on September 2, 2024 and sell it today you would earn a total of 448,121 from holding Song Hong Garment or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 54.55% |
| Values | Daily Returns |
Global Electrical Technology vs. Song Hong Garment
Performance |
| Timeline |
| Global Electrical |
| Song Hong Garment |
Global Electrical and Song Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Electrical and Song Hong
The main advantage of trading using opposite Global Electrical and Song Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Electrical position performs unexpectedly, Song Hong 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 Song Hong will offset losses from the drop in Song Hong's long position.| Global Electrical vs. DOMESCO Medical Import | Global Electrical vs. Binh Duong Trade | Global Electrical vs. Petrovietnam Technical Services | Global Electrical vs. VTC Telecommunications JSC |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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