Correlation Between Guangdong Investment and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Genuine Parts 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 Genuine Parts 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 Genuine Parts, you can compare the effects of market volatilities on Guangdong Investment and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Genuine Parts.
Diversification Opportunities for Guangdong Investment and Genuine Parts
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangdong and Genuine is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Genuine Parts go up and down completely randomly.
Pair Corralation between Guangdong Investment and Genuine Parts
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 2.92 times more return on investment than Genuine Parts. However, Guangdong Investment is 2.92 times more volatile than Genuine Parts. It trades about 0.08 of its potential returns per unit of risk. Genuine Parts is currently generating about 0.0 per unit of risk. If you would invest 31.00 in Guangdong Investment Limited on October 16, 2024 and sell it today you would earn a total of 42.00 from holding Guangdong Investment Limited or generate 135.48% 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. Genuine Parts
Performance |
| Timeline |
| Guangdong Investment |
| Genuine Parts |
Guangdong Investment and Genuine Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Genuine Parts
The main advantage of trading using opposite Guangdong Investment and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.| Guangdong Investment vs. OFFICE DEPOT | Guangdong Investment vs. CITY OFFICE REIT | Guangdong Investment vs. Jacquet Metal Service | Guangdong Investment vs. Waste Management |
| Genuine Parts vs. HEALTHSTREAM | Genuine Parts vs. OPKO HEALTH | Genuine Parts vs. CEOTRONICS | Genuine Parts vs. National Health Investors |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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