Correlation Between Guangdong Investment and SAFETY MEDICAL
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and SAFETY MEDICAL 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 SAFETY MEDICAL 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 SAFETY MEDICAL PROD, you can compare the effects of market volatilities on Guangdong Investment and SAFETY MEDICAL 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 SAFETY MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and SAFETY MEDICAL.
Diversification Opportunities for Guangdong Investment and SAFETY MEDICAL
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guangdong and SAFETY is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and SAFETY MEDICAL PROD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAFETY MEDICAL PROD 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 SAFETY MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAFETY MEDICAL PROD has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and SAFETY MEDICAL go up and down completely randomly.
Pair Corralation between Guangdong Investment and SAFETY MEDICAL
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 2.18 times more return on investment than SAFETY MEDICAL. However, Guangdong Investment is 2.18 times more volatile than SAFETY MEDICAL PROD. It trades about 0.07 of its potential returns per unit of risk. SAFETY MEDICAL PROD is currently generating about -0.04 per unit of risk. If you would invest 16.00 in Guangdong Investment Limited on October 14, 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 | Weak |
| Accuracy | 97.01% |
| Values | Daily Returns |
Guangdong Investment Limited vs. SAFETY MEDICAL PROD
Performance |
| Timeline |
| Guangdong Investment |
| SAFETY MEDICAL PROD |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Guangdong Investment and SAFETY MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and SAFETY MEDICAL
The main advantage of trading using opposite Guangdong Investment and SAFETY MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, SAFETY MEDICAL 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 SAFETY MEDICAL will offset losses from the drop in SAFETY MEDICAL'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 |
| SAFETY MEDICAL vs. Guangdong Investment Limited | SAFETY MEDICAL vs. Vienna Insurance Group | SAFETY MEDICAL vs. Keck Seng Investments | SAFETY MEDICAL vs. PennantPark Investment |
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.
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