Correlation Between Waste Management and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Guangdong Investment Limited, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Guangdong Investment.
Diversification Opportunities for Waste Management and Guangdong Investment
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Waste and Guangdong is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and Guangdong Investment go up and down completely randomly.
Pair Corralation between Waste Management and Guangdong Investment
Assuming the 90 days trading horizon Waste Management is expected to under-perform the Guangdong Investment. But the stock apears to be less risky and, when comparing its historical volatility, Waste Management is 3.63 times less risky than Guangdong Investment. The stock trades about -0.15 of its potential returns per unit of risk. The Guangdong Investment Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Guangdong Investment Limited on October 30, 2024 and sell it today you would earn a total of 15.00 from holding Guangdong Investment Limited or generate 26.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Guangdong Investment Limited
Performance |
| Timeline |
| Waste Management |
| Guangdong Investment |
Waste Management and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Guangdong Investment
The main advantage of trading using opposite Waste Management and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. MARKET VECTR RETAIL | Waste Management vs. NXP Semiconductors NV | Waste Management vs. Hua Hong Semiconductor | Waste Management vs. CANON MARKETING JP |
| Guangdong Investment vs. PARKEN Sport Entertainment | Guangdong Investment vs. Aluminum of | Guangdong Investment vs. FIREWEED METALS P | Guangdong Investment vs. ARDAGH METAL PACDL 0001 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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