Correlation Between Guangdong Investment and CARSALESCOM
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM, you can compare the effects of market volatilities on Guangdong Investment and CARSALESCOM 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 CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and CARSALESCOM.
Diversification Opportunities for Guangdong Investment and CARSALESCOM
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guangdong and CARSALESCOM is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and CARSALESCOM go up and down completely randomly.
Pair Corralation between Guangdong Investment and CARSALESCOM
Assuming the 90 days horizon Guangdong Investment Limited is expected to under-perform the CARSALESCOM. In addition to that, Guangdong Investment is 2.34 times more volatile than CARSALESCOM. It trades about -0.13 of its total potential returns per unit of risk. CARSALESCOM is currently generating about 0.26 per unit of volatility. If you would invest 2,180 in CARSALESCOM on October 25, 2024 and sell it today you would earn a total of 180.00 from holding CARSALESCOM or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Guangdong Investment Limited vs. CARSALESCOM
Performance |
| Timeline |
| Guangdong Investment |
| CARSALESCOM |
Guangdong Investment and CARSALESCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and CARSALESCOM
The main advantage of trading using opposite Guangdong Investment and CARSALESCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, CARSALESCOM 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 CARSALESCOM will offset losses from the drop in CARSALESCOM's long position.| Guangdong Investment vs. American Water Works | Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Gelsenwasser AG | Guangdong Investment vs. American States Water |
| CARSALESCOM vs. SHIP HEALTHCARE HLDGINC | CARSALESCOM vs. CVS Health | CARSALESCOM vs. Citic Telecom International | CARSALESCOM vs. COMBA TELECOM SYST |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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