Correlation Between Guangdong Investment and SIVERS SEMICONDUCTORS
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB, you can compare the effects of market volatilities on Guangdong Investment and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and SIVERS SEMICONDUCTORS.
Diversification Opportunities for Guangdong Investment and SIVERS SEMICONDUCTORS
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and SIVERS is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and SIVERS SEMICONDUCTORS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIVERS SEMICONDUCTORS has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and SIVERS SEMICONDUCTORS go up and down completely randomly.
Pair Corralation between Guangdong Investment and SIVERS SEMICONDUCTORS
Assuming the 90 days horizon Guangdong Investment is expected to generate 3.56 times less return on investment than SIVERS SEMICONDUCTORS. But when comparing it to its historical volatility, Guangdong Investment Limited is 2.43 times less risky than SIVERS SEMICONDUCTORS. It trades about 0.11 of its potential returns per unit of risk. SIVERS SEMICONDUCTORS AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 26.00 in SIVERS SEMICONDUCTORS AB on November 27, 2024 and sell it today you would earn a total of 4.00 from holding SIVERS SEMICONDUCTORS AB or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. SIVERS SEMICONDUCTORS AB
Performance |
| Timeline |
| Guangdong Investment |
| SIVERS SEMICONDUCTORS |
Guangdong Investment and SIVERS SEMICONDUCTORS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and SIVERS SEMICONDUCTORS
The main advantage of trading using opposite Guangdong Investment and SIVERS SEMICONDUCTORS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS will offset losses from the drop in SIVERS SEMICONDUCTORS's long position.| Guangdong Investment vs. GREENX METALS LTD | Guangdong Investment vs. GLG LIFE TECH | Guangdong Investment vs. Addtech AB | Guangdong Investment vs. FIREWEED METALS P |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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