Correlation Between Gotion High and Industrial Bank

Can any of the company-specific risk be diversified away by investing in both Gotion High and Industrial Bank 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 Gotion High and Industrial Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gotion High tech and Industrial Bank Co, you can compare the effects of market volatilities on Gotion High and Industrial Bank 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 Gotion High with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gotion High and Industrial Bank.

Diversification Opportunities for Gotion High and Industrial Bank

0.21

Correlation Coefficient

Gotion High  Industrial Bank

Modest diversification

The 3 months correlation between Gotion and Industrial is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gotion High tech and Industrial Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Gotion High 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 Gotion High tech are associated (or correlated) with Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Gotion High i.e., Gotion High and Industrial Bank go up and down completely randomly.

Pair Corralation between Gotion High and Industrial Bank

Assuming the 90 days trading horizon Gotion High tech is expected to generate 1.38 times more return on investment than Industrial Bank. However, Gotion High is 1.38 times more volatile than Industrial Bank Co. It trades about 0.15 of its potential returns per unit of risk. Industrial Bank Co is currently generating about 0.14 per unit of risk. If you would invest  2,208  in Gotion High tech on December 11, 2024 and sell it today you would earn a total of  103.00  from holding Gotion High tech or generate 4.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gotion High tech  vs.  Industrial Bank Co

Gotion High tech

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gotion High tech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Gotion High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Industrial Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gotion High and Industrial Bank

The main advantage of trading using opposite Gotion High and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gotion High position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.

The idea behind Gotion High tech and Industrial Bank Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.