Correlation Between Guangdong Investment and Pentair Plc
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Pentair Plc 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 Pentair Plc 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 Pentair plc, you can compare the effects of market volatilities on Guangdong Investment and Pentair Plc 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 Pentair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Pentair Plc.
Diversification Opportunities for Guangdong Investment and Pentair Plc
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and Pentair is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc 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 Pentair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair plc has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Pentair Plc go up and down completely randomly.
Pair Corralation between Guangdong Investment and Pentair Plc
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 3.44 times more return on investment than Pentair Plc. However, Guangdong Investment is 3.44 times more volatile than Pentair plc. It trades about 0.1 of its potential returns per unit of risk. Pentair plc is currently generating about 0.1 per unit of risk. If you would invest 23.00 in Guangdong Investment Limited on November 3, 2024 and sell it today you would earn a total of 46.00 from holding Guangdong Investment Limited or generate 200.0% 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. Pentair plc
Performance |
| Timeline |
| Guangdong Investment |
| Pentair plc |
Guangdong Investment and Pentair Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Pentair Plc
The main advantage of trading using opposite Guangdong Investment and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Pentair Plc 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 Pentair Plc will offset losses from the drop in Pentair Plc's long position.| Guangdong Investment vs. Hollywood Bowl Group | Guangdong Investment vs. Tencent Music Entertainment | Guangdong Investment vs. PROSIEBENSAT1 MEDIADR4 | Guangdong Investment vs. Benchmark Electronics |
| Pentair Plc vs. MeVis Medical Solutions | Pentair Plc vs. Medical Properties Trust | Pentair Plc vs. Tencent Music Entertainment | Pentair Plc vs. Clearside Biomedical |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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