Correlation Between Guangdong Investment and NEW WORLD
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and NEW WORLD 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 NEW WORLD 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 NEW WORLD DEVCO, you can compare the effects of market volatilities on Guangdong Investment and NEW WORLD 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 NEW WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and NEW WORLD.
Diversification Opportunities for Guangdong Investment and NEW WORLD
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Guangdong and NEW is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO 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 NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and NEW WORLD go up and down completely randomly.
Pair Corralation between Guangdong Investment and NEW WORLD
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 2.1 times more return on investment than NEW WORLD. However, Guangdong Investment is 2.1 times more volatile than NEW WORLD DEVCO. It trades about 0.07 of its potential returns per unit of risk. NEW WORLD DEVCO is currently generating about -0.05 per unit of risk. If you would invest 16.00 in Guangdong Investment Limited on October 13, 2024 and sell it today you would earn a total of 55.00 from holding Guangdong Investment Limited or generate 343.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Guangdong Investment Limited vs. NEW WORLD DEVCO
Performance |
| Timeline |
| Guangdong Investment |
| NEW WORLD DEVCO |
Guangdong Investment and NEW WORLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and NEW WORLD
The main advantage of trading using opposite Guangdong Investment and NEW WORLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, NEW WORLD 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 NEW WORLD will offset losses from the drop in NEW WORLD's long position.| Guangdong Investment vs. SOLSTAD OFFSHORE NK | Guangdong Investment vs. TT Electronics PLC | Guangdong Investment vs. Suntory Beverage Food | Guangdong Investment vs. Delta Electronics Public |
| NEW WORLD vs. TOREX SEMICONDUCTOR LTD | NEW WORLD vs. ECHO INVESTMENT ZY | NEW WORLD vs. Elmos Semiconductor SE | NEW WORLD vs. Guangdong Investment Limited |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |