Correlation Between Guangdong Investment and TTW Public
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and TTW Public 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 TTW Public 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 TTW Public, you can compare the effects of market volatilities on Guangdong Investment and TTW Public 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 TTW Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and TTW Public.
Diversification Opportunities for Guangdong Investment and TTW Public
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangdong and TTW is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and TTW Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTW Public 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 TTW Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTW Public has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and TTW Public go up and down completely randomly.
Pair Corralation between Guangdong Investment and TTW Public
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 2.54 times more return on investment than TTW Public. However, Guangdong Investment is 2.54 times more volatile than TTW Public. It trades about 0.07 of its potential returns per unit of risk. TTW Public is currently generating about 0.02 per unit of risk. If you would invest 30.00 in Guangdong Investment Limited on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Guangdong Investment Limited or generate 90.0% 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. TTW Public
Performance |
| Timeline |
| Guangdong Investment |
| TTW Public |
Guangdong Investment and TTW Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and TTW Public
The main advantage of trading using opposite Guangdong Investment and TTW Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, TTW Public 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 TTW Public will offset losses from the drop in TTW Public's long position.| Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Superior Plus Corp | Guangdong Investment vs. NMI Holdings | Guangdong Investment vs. Origin Agritech |
| TTW Public vs. American Homes 4 | TTW Public vs. NURAN WIRELESS INC | TTW Public vs. SCIENCE IN SPORT | TTW Public vs. TITANIUM TRANSPORTGROUP |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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