Correlation Between Guangdong Investment and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and SWISS WATER 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on Guangdong Investment and SWISS WATER 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 SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and SWISS WATER.
Diversification Opportunities for Guangdong Investment and SWISS WATER
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangdong and SWISS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and SWISS WATER go up and down completely randomly.
Pair Corralation between Guangdong Investment and SWISS WATER
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 1.08 times more return on investment than SWISS WATER. However, Guangdong Investment is 1.08 times more volatile than SWISS WATER DECAFFCOFFEE. It trades about 0.22 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about -0.08 per unit of risk. If you would invest 56.00 in Guangdong Investment Limited on October 16, 2024 and sell it today you would earn a total of 17.00 from holding Guangdong Investment Limited or generate 30.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| Guangdong Investment |
| SWISS WATER DECAFFCOFFEE |
Guangdong Investment and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and SWISS WATER
The main advantage of trading using opposite Guangdong Investment and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| Guangdong Investment vs. OFFICE DEPOT | Guangdong Investment vs. CITY OFFICE REIT | Guangdong Investment vs. Jacquet Metal Service | Guangdong Investment vs. Waste Management |
| SWISS WATER vs. Planet Fitness | SWISS WATER vs. PURETECH HEALTH PLC | SWISS WATER vs. Guangdong Investment Limited | SWISS WATER vs. Aluminum of |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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