Correlation Between Sovereign Metals and GUOTAI JUNAN
Can any of the company-specific risk be diversified away by investing in both Sovereign Metals and GUOTAI JUNAN 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 Sovereign Metals and GUOTAI JUNAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sovereign Metals Limited and GUOTAI JUNAN SEC, you can compare the effects of market volatilities on Sovereign Metals and GUOTAI JUNAN 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 Sovereign Metals with a short position of GUOTAI JUNAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sovereign Metals and GUOTAI JUNAN.
Diversification Opportunities for Sovereign Metals and GUOTAI JUNAN
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sovereign and GUOTAI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sovereign Metals Limited and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC and Sovereign Metals 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 Sovereign Metals Limited are associated (or correlated) with GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of Sovereign Metals i.e., Sovereign Metals and GUOTAI JUNAN go up and down completely randomly.
Pair Corralation between Sovereign Metals and GUOTAI JUNAN
Assuming the 90 days horizon Sovereign Metals Limited is expected to generate 1.12 times more return on investment than GUOTAI JUNAN. However, Sovereign Metals is 1.12 times more volatile than GUOTAI JUNAN SEC. It trades about 0.14 of its potential returns per unit of risk. GUOTAI JUNAN SEC is currently generating about 0.06 per unit of risk. If you would invest 44.00 in Sovereign Metals Limited on August 30, 2024 and sell it today you would earn a total of 4.00 from holding Sovereign Metals Limited or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sovereign Metals Limited vs. GUOTAI JUNAN SEC
Performance |
| Timeline |
| Sovereign Metals |
| GUOTAI JUNAN SEC |
Sovereign Metals and GUOTAI JUNAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sovereign Metals and GUOTAI JUNAN
The main advantage of trading using opposite Sovereign Metals and GUOTAI JUNAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sovereign Metals position performs unexpectedly, GUOTAI JUNAN 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 GUOTAI JUNAN will offset losses from the drop in GUOTAI JUNAN's long position.| Sovereign Metals vs. HEMISPHERE EGY | Sovereign Metals vs. Computer And Technologies | Sovereign Metals vs. GLG LIFE TECH | Sovereign Metals vs. ORMAT TECHNOLOGIES |
| GUOTAI JUNAN vs. Macquarie Group Limited | GUOTAI JUNAN vs. MSCI Inc | GUOTAI JUNAN vs. Superior Plus Corp | GUOTAI JUNAN vs. NMI Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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