Correlation Between Guangdong Investment and Encavis AG
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Encavis AG 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 Encavis AG 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 Encavis AG, you can compare the effects of market volatilities on Guangdong Investment and Encavis AG 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 Encavis AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Encavis AG.
Diversification Opportunities for Guangdong Investment and Encavis AG
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Encavis is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Encavis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encavis AG 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 Encavis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encavis AG has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Encavis AG go up and down completely randomly.
Pair Corralation between Guangdong Investment and Encavis AG
Assuming the 90 days horizon Guangdong Investment Limited is expected to under-perform the Encavis AG. In addition to that, Guangdong Investment is 34.91 times more volatile than Encavis AG. It trades about -0.15 of its total potential returns per unit of risk. Encavis AG is currently generating about 0.16 per unit of volatility. If you would invest 1,746 in Encavis AG on November 3, 2024 and sell it today you would earn a total of 7.00 from holding Encavis AG or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Encavis AG
Performance |
| Timeline |
| Guangdong Investment |
| Encavis AG |
Guangdong Investment and Encavis AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Encavis AG
The main advantage of trading using opposite Guangdong Investment and Encavis AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Encavis AG 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 Encavis AG will offset losses from the drop in Encavis AG's long position.| Guangdong Investment vs. Hollywood Bowl Group | Guangdong Investment vs. Tencent Music Entertainment | Guangdong Investment vs. PROSIEBENSAT1 MEDIADR4 | Guangdong Investment vs. Benchmark Electronics |
| Encavis AG vs. CN LGYPWRGRUNSPADR10 | Encavis AG vs. ALERION CLEANPOWER | Encavis AG vs. PNE AG | Encavis AG vs. EQT AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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