Correlation Between Global Water and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both Global Water and Guangdong 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 Global Water and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Water Resources and Guangdong Investment Limited, you can compare the effects of market volatilities on Global Water and Guangdong 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 Global Water with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Water and Guangdong Investment.
Diversification Opportunities for Global Water and Guangdong Investment
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Guangdong is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Global Water Resources and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and Global Water 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 Global Water Resources are associated (or correlated) with Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of Global Water i.e., Global Water and Guangdong Investment go up and down completely randomly.
Pair Corralation between Global Water and Guangdong Investment
Given the investment horizon of 90 days Global Water is expected to generate 7.45 times less return on investment than Guangdong Investment. But when comparing it to its historical volatility, Global Water Resources is 3.73 times less risky than Guangdong Investment. It trades about 0.02 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 81.00 in Guangdong Investment Limited on September 5, 2024 and sell it today you would lose (20.00) from holding Guangdong Investment Limited or give up 24.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.18% |
| Values | Daily Returns |
Global Water Resources vs. Guangdong Investment Limited
Performance |
| Timeline |
| Global Water Resources |
| Guangdong Investment |
Global Water and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Water and Guangdong Investment
The main advantage of trading using opposite Global Water and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Water position performs unexpectedly, Guangdong 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 Guangdong Investment will offset losses from the drop in Guangdong Investment's long position.| Global Water vs. Middlesex Water | Global Water vs. California Water Service | Global Water vs. American States Water | Global Water vs. Artesian Resources |
| Guangdong Investment vs. Artesian Resources | Guangdong Investment vs. Global Water Resources | Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. American Water Works |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |