Correlation Between Guangdong Investment and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Advanced Medical 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 Advanced Medical 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 Advanced Medical Solutions, you can compare the effects of market volatilities on Guangdong Investment and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Advanced Medical.
Diversification Opportunities for Guangdong Investment and Advanced Medical
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangdong and Advanced is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Advanced Medical go up and down completely randomly.
Pair Corralation between Guangdong Investment and Advanced Medical
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 0.9 times more return on investment than Advanced Medical. However, Guangdong Investment Limited is 1.11 times less risky than Advanced Medical. It trades about -0.01 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about -0.21 per unit of risk. If you would invest 73.00 in Guangdong Investment Limited on October 13, 2024 and sell it today you would lose (1.00) from holding Guangdong Investment Limited or give up 1.37% 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. Advanced Medical Solutions
Performance |
| Timeline |
| Guangdong Investment |
| Advanced Medical Sol |
Guangdong Investment and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Advanced Medical
The main advantage of trading using opposite Guangdong Investment and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| Guangdong Investment vs. American Water Works | Guangdong Investment vs. Aqua America | Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Companhia de Saneamento |
| Advanced Medical vs. FIREWEED METALS P | Advanced Medical vs. FIRST SAVINGS FINL | Advanced Medical vs. Guangdong Investment Limited | Advanced Medical vs. GRIFFIN MINING LTD |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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