Correlation Between NSTAR and Guangdong Investment
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By analyzing existing cross correlation between NSTAR Electric Co and Guangdong Investment Limited, you can compare the effects of market volatilities on NSTAR 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 NSTAR with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NSTAR and Guangdong Investment.
Diversification Opportunities for NSTAR and Guangdong Investment
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NSTAR and Guangdong is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NSTAR Electric 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 NSTAR 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 NSTAR Electric 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 NSTAR i.e., NSTAR and Guangdong Investment go up and down completely randomly.
Pair Corralation between NSTAR and Guangdong Investment
Assuming the 90 days trading horizon NSTAR Electric Co is expected to under-perform the Guangdong Investment. But the bond apears to be less risky and, when comparing its historical volatility, NSTAR Electric Co is 10.27 times less risky than Guangdong Investment. The bond trades about -0.01 of its potential returns per unit of risk. The Guangdong Investment Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Guangdong Investment Limited on September 12, 2024 and sell it today you would lose (11.00) from holding Guangdong Investment Limited or give up 15.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 76.71% |
Values | Daily Returns |
NSTAR Electric Co vs. Guangdong Investment Limited
Performance |
Timeline |
NSTAR Electric |
Guangdong Investment |
NSTAR and Guangdong Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NSTAR and Guangdong Investment
The main advantage of trading using opposite NSTAR and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NSTAR 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.NSTAR vs. AEP TEX INC | NSTAR vs. US BANK NATIONAL | NSTAR vs. Recursion Pharmaceuticals | NSTAR vs. SoundHound AI |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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