Correlation Between Sto SE and Guangdong Investment
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By analyzing existing cross correlation between Sto SE Co and Guangdong Investment Limited, you can compare the effects of market volatilities on Sto SE 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 Sto SE with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sto SE and Guangdong Investment.
Diversification Opportunities for Sto SE and Guangdong Investment
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sto and Guangdong is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sto SE Co and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and Sto SE 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 Sto SE Co 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 Sto SE i.e., Sto SE and Guangdong Investment go up and down completely randomly.
Pair Corralation between Sto SE and Guangdong Investment
Assuming the 90 days trading horizon Sto SE Co is expected to under-perform the Guangdong Investment. But the stock apears to be less risky and, when comparing its historical volatility, Sto SE Co is 3.6 times less risky than Guangdong Investment. The stock trades about -0.02 of its potential returns per unit of risk. The Guangdong Investment Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Guangdong Investment Limited on November 2, 2024 and sell it today you would earn a total of 53.00 from holding Guangdong Investment Limited or generate 331.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sto SE Co vs. Guangdong Investment Limited
Performance |
| Timeline |
| Sto SE |
| Guangdong Investment |
Sto SE and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sto SE and Guangdong Investment
The main advantage of trading using opposite Sto SE and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sto SE 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.| Sto SE vs. United Natural Foods | Sto SE vs. British American Tobacco | Sto SE vs. MONEYSUPERMARKET | Sto SE vs. ETFS Coffee ETC |
| Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Companhia de Saneamento | Guangdong Investment vs. TTW Public |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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