Correlation Between Guangdong Investment and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and ECHO INVESTMENT 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 ECHO INVESTMENT 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 ECHO INVESTMENT ZY, you can compare the effects of market volatilities on Guangdong Investment and ECHO INVESTMENT 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 ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and ECHO INVESTMENT.
Diversification Opportunities for Guangdong Investment and ECHO INVESTMENT
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and ECHO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between Guangdong Investment and ECHO INVESTMENT
Assuming the 90 days horizon Guangdong Investment Limited is expected to under-perform the ECHO INVESTMENT. In addition to that, Guangdong Investment is 2.87 times more volatile than ECHO INVESTMENT ZY. It trades about -0.13 of its total potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about -0.19 per unit of volatility. If you would invest 107.00 in ECHO INVESTMENT ZY on October 25, 2024 and sell it today you would lose (5.00) from holding ECHO INVESTMENT ZY or give up 4.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. ECHO INVESTMENT ZY
Performance |
| Timeline |
| Guangdong Investment |
| ECHO INVESTMENT ZY |
Guangdong Investment and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and ECHO INVESTMENT
The main advantage of trading using opposite Guangdong Investment and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, ECHO INVESTMENT 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| Guangdong Investment vs. American Water Works | Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Gelsenwasser AG | Guangdong Investment vs. American States Water |
| ECHO INVESTMENT vs. NEW WORLD DEVCO | ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. Origin Agritech | ECHO INVESTMENT vs. Identiv |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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