Correlation Between CHINA HUARONG and GPT
Can any of the company-specific risk be diversified away by investing in both CHINA HUARONG and GPT 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 CHINA HUARONG and GPT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA HUARONG ENERHD 50 and GPT Group, you can compare the effects of market volatilities on CHINA HUARONG and GPT 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 CHINA HUARONG with a short position of GPT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA HUARONG and GPT.
Diversification Opportunities for CHINA HUARONG and GPT
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and GPT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CHINA HUARONG ENERHD 50 and GPT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPT Group and CHINA HUARONG 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 CHINA HUARONG ENERHD 50 are associated (or correlated) with GPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPT Group has no effect on the direction of CHINA HUARONG i.e., CHINA HUARONG and GPT go up and down completely randomly.
Pair Corralation between CHINA HUARONG and GPT
Assuming the 90 days trading horizon CHINA HUARONG ENERHD 50 is expected to under-perform the GPT. In addition to that, CHINA HUARONG is 5.96 times more volatile than GPT Group. It trades about -0.03 of its total potential returns per unit of risk. GPT Group is currently generating about -0.07 per unit of volatility. If you would invest 277.00 in GPT Group on September 13, 2024 and sell it today you would lose (11.00) from holding GPT Group or give up 3.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA HUARONG ENERHD 50 vs. GPT Group
Performance |
| Timeline |
| CHINA HUARONG ENERHD |
| GPT Group |
CHINA HUARONG and GPT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA HUARONG and GPT
The main advantage of trading using opposite CHINA HUARONG and GPT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA HUARONG position performs unexpectedly, GPT 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 GPT will offset losses from the drop in GPT's long position.| CHINA HUARONG vs. WILLIS LEASE FIN | CHINA HUARONG vs. SAFETY MEDICAL PROD | CHINA HUARONG vs. AVITA Medical | CHINA HUARONG vs. CarsalesCom |
| GPT vs. Shin Etsu Chemical Co | GPT vs. MagnaChip Semiconductor Corp | GPT vs. Sanyo Chemical Industries | GPT vs. Nordic Semiconductor ASA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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