Correlation Between Guangdong Investment and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and MGIC INVESTMENT 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 MGIC INVESTMENT 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 MGIC INVESTMENT, you can compare the effects of market volatilities on Guangdong Investment and MGIC INVESTMENT 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 MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and MGIC INVESTMENT.
Diversification Opportunities for Guangdong Investment and MGIC INVESTMENT
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and MGIC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT 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 MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Guangdong Investment and MGIC INVESTMENT
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 2.64 times more return on investment than MGIC INVESTMENT. However, Guangdong Investment is 2.64 times more volatile than MGIC INVESTMENT. It trades about 0.22 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about -0.01 per unit of risk. If you would invest 55.00 in Guangdong Investment Limited on October 23, 2024 and sell it today you would earn a total of 16.00 from holding Guangdong Investment Limited or generate 29.09% 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. MGIC INVESTMENT
Performance |
| Timeline |
| Guangdong Investment |
| MGIC INVESTMENT |
Guangdong Investment and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and MGIC INVESTMENT
The main advantage of trading using opposite Guangdong Investment and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.| Guangdong Investment vs. FORMPIPE SOFTWARE AB | Guangdong Investment vs. USU Software AG | Guangdong Investment vs. CyberArk Software | Guangdong Investment vs. High Liner Foods |
| MGIC INVESTMENT vs. FIH MOBILE | MGIC INVESTMENT vs. Iridium Communications | MGIC INVESTMENT vs. SOCKET MOBILE NEW | MGIC INVESTMENT vs. Air Transport Services |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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