Correlation Between SEI Investments and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both SEI Investments 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 SEI Investments and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEI Investments and Guangdong Investment Limited, you can compare the effects of market volatilities on SEI Investments 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 SEI Investments with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Investments and Guangdong Investment.
Diversification Opportunities for SEI Investments and Guangdong Investment
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between SEI and Guangdong is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and SEI Investments 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 SEI Investments 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 SEI Investments i.e., SEI Investments and Guangdong Investment go up and down completely randomly.
Pair Corralation between SEI Investments and Guangdong Investment
Given the investment horizon of 90 days SEI Investments is expected to generate 1.89 times less return on investment than Guangdong Investment. But when comparing it to its historical volatility, SEI Investments is 4.96 times less risky than Guangdong Investment. It trades about 0.12 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Guangdong Investment Limited on September 14, 2024 and sell it today you would earn a total of 16.00 from holding Guangdong Investment Limited or generate 23.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
SEI Investments vs. Guangdong Investment Limited
Performance |
| Timeline |
| SEI Investments |
| Guangdong Investment |
SEI Investments and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI Investments and Guangdong Investment
The main advantage of trading using opposite SEI Investments and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments 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.| SEI Investments vs. Visa Class A | SEI Investments vs. Diamond Hill Investment | SEI Investments vs. Distoken Acquisition | SEI Investments vs. AllianceBernstein Holding LP |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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