Correlation Between Guangzhou Baiyunshan and Hisamitsu Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Guangzhou Baiyunshan and Hisamitsu Pharmaceutical 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 Guangzhou Baiyunshan and Hisamitsu Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangzhou Baiyunshan Pharmaceutical and Hisamitsu Pharmaceutical Co, you can compare the effects of market volatilities on Guangzhou Baiyunshan and Hisamitsu Pharmaceutical 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 Guangzhou Baiyunshan with a short position of Hisamitsu Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Baiyunshan and Hisamitsu Pharmaceutical.
Diversification Opportunities for Guangzhou Baiyunshan and Hisamitsu Pharmaceutical
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Guangzhou and Hisamitsu is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Baiyunshan Pharmaceu and Hisamitsu Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisamitsu Pharmaceutical and Guangzhou Baiyunshan 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 Guangzhou Baiyunshan Pharmaceutical are associated (or correlated) with Hisamitsu Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisamitsu Pharmaceutical has no effect on the direction of Guangzhou Baiyunshan i.e., Guangzhou Baiyunshan and Hisamitsu Pharmaceutical go up and down completely randomly.
Pair Corralation between Guangzhou Baiyunshan and Hisamitsu Pharmaceutical
Assuming the 90 days horizon Guangzhou Baiyunshan Pharmaceutical is expected to under-perform the Hisamitsu Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou Baiyunshan Pharmaceutical is 2.67 times less risky than Hisamitsu Pharmaceutical. The stock trades about -0.17 of its potential returns per unit of risk. The Hisamitsu Pharmaceutical Co is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,500 in Hisamitsu Pharmaceutical Co on October 15, 2024 and sell it today you would earn a total of 320.00 from holding Hisamitsu Pharmaceutical Co or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Baiyunshan Pharmaceu vs. Hisamitsu Pharmaceutical Co
Performance |
| Timeline |
| Guangzhou Baiyunshan |
| Hisamitsu Pharmaceutical |
Guangzhou Baiyunshan and Hisamitsu Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Baiyunshan and Hisamitsu Pharmaceutical
The main advantage of trading using opposite Guangzhou Baiyunshan and Hisamitsu Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Baiyunshan position performs unexpectedly, Hisamitsu Pharmaceutical 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 Hisamitsu Pharmaceutical will offset losses from the drop in Hisamitsu Pharmaceutical's long position.| Guangzhou Baiyunshan vs. Superior Plus Corp | Guangzhou Baiyunshan vs. NMI Holdings | Guangzhou Baiyunshan vs. SIVERS SEMICONDUCTORS AB | Guangzhou Baiyunshan vs. Talanx AG |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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