Correlation Between Guangdong Investment and MOBILE FACTORY
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and MOBILE FACTORY 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 MOBILE FACTORY 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 MOBILE FACTORY INC, you can compare the effects of market volatilities on Guangdong Investment and MOBILE FACTORY 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 MOBILE FACTORY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and MOBILE FACTORY.
Diversification Opportunities for Guangdong Investment and MOBILE FACTORY
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Guangdong and MOBILE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and MOBILE FACTORY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOBILE FACTORY INC 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 MOBILE FACTORY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOBILE FACTORY INC has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and MOBILE FACTORY go up and down completely randomly.
Pair Corralation between Guangdong Investment and MOBILE FACTORY
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 1.37 times more return on investment than MOBILE FACTORY. However, Guangdong Investment is 1.37 times more volatile than MOBILE FACTORY INC. It trades about 0.12 of its potential returns per unit of risk. MOBILE FACTORY INC is currently generating about 0.08 per unit of risk. If you would invest 58.00 in Guangdong Investment Limited on October 14, 2024 and sell it today you would earn a total of 13.00 from holding Guangdong Investment Limited or generate 22.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. MOBILE FACTORY INC
Performance |
| Timeline |
| Guangdong Investment |
| MOBILE FACTORY INC |
Guangdong Investment and MOBILE FACTORY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and MOBILE FACTORY
The main advantage of trading using opposite Guangdong Investment and MOBILE FACTORY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, MOBILE FACTORY 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 MOBILE FACTORY will offset losses from the drop in MOBILE FACTORY's long position.| Guangdong Investment vs. Boyd Gaming | Guangdong Investment vs. CONTAGIOUS GAMING INC | Guangdong Investment vs. Nomad Foods | Guangdong Investment vs. International Game Technology |
| MOBILE FACTORY vs. Linedata Services SA | MOBILE FACTORY vs. Scottish Mortgage Investment | MOBILE FACTORY vs. Guangdong Investment Limited | MOBILE FACTORY vs. Alliance Data Systems |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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