Correlation Between Guangdong Investment and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Virtus 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 Virtus 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 Virtus Investment Partners, you can compare the effects of market volatilities on Guangdong Investment and Virtus 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Virtus Investment.
Diversification Opportunities for Guangdong Investment and Virtus Investment
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guangdong and Virtus is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Virtus Investment go up and down completely randomly.
Pair Corralation between Guangdong Investment and Virtus Investment
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 2.19 times more return on investment than Virtus Investment. However, Guangdong Investment is 2.19 times more volatile than Virtus Investment Partners. It trades about 0.22 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about -0.21 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. Virtus Investment Partners
Performance |
| Timeline |
| Guangdong Investment |
| Virtus Investment |
Guangdong Investment and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Virtus Investment
The main advantage of trading using opposite Guangdong Investment and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Virtus 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 Virtus Investment will offset losses from the drop in Virtus 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 |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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