Correlation Between Guangdong Investment and HF FOODS
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and HF FOODS 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 HF FOODS 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 HF FOODS GRP, you can compare the effects of market volatilities on Guangdong Investment and HF FOODS 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 HF FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and HF FOODS.
Diversification Opportunities for Guangdong Investment and HF FOODS
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and 3GX is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP 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 HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and HF FOODS go up and down completely randomly.
Pair Corralation between Guangdong Investment and HF FOODS
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 1.49 times more return on investment than HF FOODS. However, Guangdong Investment is 1.49 times more volatile than HF FOODS GRP. It trades about -0.11 of its potential returns per unit of risk. HF FOODS GRP is currently generating about -0.33 per unit of risk. If you would invest 77.00 in Guangdong Investment Limited on November 5, 2024 and sell it today you would lose (8.00) from holding Guangdong Investment Limited or give up 10.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. HF FOODS GRP
Performance |
| Timeline |
| Guangdong Investment |
| HF FOODS GRP |
Guangdong Investment and HF FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and HF FOODS
The main advantage of trading using opposite Guangdong Investment and HF FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, HF FOODS 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 HF FOODS will offset losses from the drop in HF FOODS's long position.| Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Companhia de Saneamento | Guangdong Investment vs. TTW Public |
| HF FOODS vs. Prosiebensat 1 Media | HF FOODS vs. RCS MediaGroup SpA | HF FOODS vs. DISTRICT METALS | HF FOODS vs. GigaMedia |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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