Correlation Between Loar Holdings and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both Loar Holdings 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 Loar Holdings and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loar Holdings and Guangdong Investment Limited, you can compare the effects of market volatilities on Loar Holdings 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 Loar Holdings with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loar Holdings and Guangdong Investment.
Diversification Opportunities for Loar Holdings and Guangdong Investment
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Loar and Guangdong is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Loar Holdings and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and Loar Holdings 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 Loar Holdings 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 Loar Holdings i.e., Loar Holdings and Guangdong Investment go up and down completely randomly.
Pair Corralation between Loar Holdings and Guangdong Investment
Given the investment horizon of 90 days Loar Holdings is expected to generate 1.92 times more return on investment than Guangdong Investment. However, Loar Holdings is 1.92 times more volatile than Guangdong Investment Limited. It trades about 0.11 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about -0.12 per unit of risk. If you would invest 8,618 in Loar Holdings on September 1, 2024 and sell it today you would earn a total of 590.00 from holding Loar Holdings or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loar Holdings vs. Guangdong Investment Limited
Performance |
| Timeline |
| Loar Holdings |
| Guangdong Investment |
Loar Holdings and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loar Holdings and Guangdong Investment
The main advantage of trading using opposite Loar Holdings and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loar Holdings 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.| Loar Holdings vs. Guangdong Investment Limited | Loar Holdings vs. Old Republic International | Loar Holdings vs. GMS Inc | Loar Holdings vs. Aegon NV ADR |
| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Endesa SA ADR | Guangdong Investment vs. HUMANA INC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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