Correlation Between Guangshen Railway and Greenbrier Companies
Can any of the company-specific risk be diversified away by investing in both Guangshen Railway and Greenbrier Companies 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 Guangshen Railway and Greenbrier Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangshen Railway and Greenbrier Companies, you can compare the effects of market volatilities on Guangshen Railway and Greenbrier Companies 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 Guangshen Railway with a short position of Greenbrier Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangshen Railway and Greenbrier Companies.
Diversification Opportunities for Guangshen Railway and Greenbrier Companies
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangshen and Greenbrier is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Guangshen Railway and Greenbrier Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenbrier Companies and Guangshen Railway 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 Guangshen Railway are associated (or correlated) with Greenbrier Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenbrier Companies has no effect on the direction of Guangshen Railway i.e., Guangshen Railway and Greenbrier Companies go up and down completely randomly.
Pair Corralation between Guangshen Railway and Greenbrier Companies
Assuming the 90 days horizon Guangshen Railway is expected to generate 4.16 times more return on investment than Greenbrier Companies. However, Guangshen Railway is 4.16 times more volatile than Greenbrier Companies. It trades about 0.07 of its potential returns per unit of risk. Greenbrier Companies is currently generating about 0.08 per unit of risk. If you would invest 15.00 in Guangshen Railway on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Guangshen Railway or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 52.87% |
| Values | Daily Returns |
Guangshen Railway vs. Greenbrier Companies
Performance |
| Timeline |
| Guangshen Railway |
| Greenbrier Companies |
Guangshen Railway and Greenbrier Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangshen Railway and Greenbrier Companies
The main advantage of trading using opposite Guangshen Railway and Greenbrier Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangshen Railway position performs unexpectedly, Greenbrier Companies 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 Greenbrier Companies will offset losses from the drop in Greenbrier Companies' long position.| Guangshen Railway vs. Trinity Industries | Guangshen Railway vs. CSX Corporation | Guangshen Railway vs. Norfolk Southern | Guangshen Railway vs. Greenbrier Companies |
| Greenbrier Companies vs. LB Foster | Greenbrier Companies vs. Freightcar America | Greenbrier Companies vs. CSX Corporation | Greenbrier Companies vs. Trinity Industries |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |