Correlation Between REVO INSURANCE and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and Guangdong Investment Limited, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and Guangdong Investment.
Diversification Opportunities for REVO INSURANCE and Guangdong Investment
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between REVO and Guangdong is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and REVO INSURANCE 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and Guangdong Investment go up and down completely randomly.
Pair Corralation between REVO INSURANCE and Guangdong Investment
Assuming the 90 days horizon REVO INSURANCE SPA is expected to generate 0.67 times more return on investment than Guangdong Investment. However, REVO INSURANCE SPA is 1.48 times less risky than Guangdong Investment. It trades about -0.21 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about -0.15 per unit of risk. If you would invest 1,300 in REVO INSURANCE SPA on November 3, 2024 and sell it today you would lose (165.00) from holding REVO INSURANCE SPA or give up 12.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. Guangdong Investment Limited
Performance |
| Timeline |
| REVO INSURANCE SPA |
| Guangdong Investment |
REVO INSURANCE and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and Guangdong Investment
The main advantage of trading using opposite REVO INSURANCE and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.| REVO INSURANCE vs. BlueScope Steel Limited | REVO INSURANCE vs. Olympic Steel | REVO INSURANCE vs. WILLIS LEASE FIN | REVO INSURANCE vs. GRENKELEASING Dusseldorf |
| Guangdong Investment vs. Hollywood Bowl Group | Guangdong Investment vs. Tencent Music Entertainment | Guangdong Investment vs. PROSIEBENSAT1 MEDIADR4 | Guangdong Investment vs. Benchmark Electronics |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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