Correlation Between Guangdong Investment and Performance Food
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on Guangdong Investment and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Performance Food.
Diversification Opportunities for Guangdong Investment and Performance Food
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Performance is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Performance Food go up and down completely randomly.
Pair Corralation between Guangdong Investment and Performance Food
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 3.66 times more return on investment than Performance Food. However, Guangdong Investment is 3.66 times more volatile than Performance Food Group. It trades about 0.27 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.2 per unit of risk. If you would invest 66.00 in Guangdong Investment Limited on October 11, 2024 and sell it today you would earn a total of 12.00 from holding Guangdong Investment Limited or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Performance Food Group
Performance |
| Timeline |
| Guangdong Investment |
| Performance Food |
Guangdong Investment and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Performance Food
The main advantage of trading using opposite Guangdong Investment and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Guangdong Investment vs. Ross Stores | Guangdong Investment vs. SPARTAN STORES | Guangdong Investment vs. ASURE SOFTWARE | Guangdong Investment vs. Kingdee International Software |
| Performance Food vs. Guangdong Investment Limited | Performance Food vs. DFS Furniture PLC | Performance Food vs. CHRYSALIS INVESTMENTS LTD | Performance Food vs. Hisense Home Appliances |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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