Correlation Between Guangdong Investment and Intel
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Intel 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 Intel 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 Intel, you can compare the effects of market volatilities on Guangdong Investment and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Intel.
Diversification Opportunities for Guangdong Investment and Intel
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and Intel is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Intel go up and down completely randomly.
Pair Corralation between Guangdong Investment and Intel
Assuming the 90 days horizon Guangdong Investment is expected to generate 4.35 times less return on investment than Intel. But when comparing it to its historical volatility, Guangdong Investment Limited is 1.81 times less risky than Intel. It trades about 0.11 of its potential returns per unit of risk. Intel is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,937 in Intel on November 27, 2024 and sell it today you would earn a total of 410.00 from holding Intel or generate 21.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Intel
Performance |
| Timeline |
| Guangdong Investment |
| Intel |
Guangdong Investment and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Intel
The main advantage of trading using opposite Guangdong Investment and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.| Guangdong Investment vs. GREENX METALS LTD | Guangdong Investment vs. GLG LIFE TECH | Guangdong Investment vs. Addtech AB | Guangdong Investment vs. FIREWEED METALS P |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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