Correlation Between Guangzhou Seagull and Wasu Media

Can any of the company-specific risk be diversified away by investing in both Guangzhou Seagull and Wasu Media 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 Guangzhou Seagull and Wasu Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangzhou Seagull Kitchen and Wasu Media Holding, you can compare the effects of market volatilities on Guangzhou Seagull and Wasu Media 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 Guangzhou Seagull with a short position of Wasu Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Seagull and Wasu Media.

Diversification Opportunities for Guangzhou Seagull and Wasu Media

0.95

Correlation Coefficient

Guangzhou Seagull  Wasu Media

Almost no diversification

The 3 months correlation between Guangzhou and Wasu is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Seagull Kitchen and Wasu Media Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasu Media Holding and Guangzhou Seagull 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 Guangzhou Seagull Kitchen are associated (or correlated) with Wasu Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasu Media Holding has no effect on the direction of Guangzhou Seagull i.e., Guangzhou Seagull and Wasu Media go up and down completely randomly.

Pair Corralation between Guangzhou Seagull and Wasu Media

Assuming the 90 days trading horizon Guangzhou Seagull Kitchen is expected to generate 0.97 times more return on investment than Wasu Media. However, Guangzhou Seagull Kitchen is 1.03 times less risky than Wasu Media. It trades about 0.27 of its potential returns per unit of risk. Wasu Media Holding is currently generating about 0.21 per unit of risk. If you would invest  236.00  in Guangzhou Seagull Kitchen on September 17, 2024 and sell it today you would earn a total of  122.00  from holding Guangzhou Seagull Kitchen or generate 51.69% return on investment over 90 days.

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

Guangzhou Seagull Kitchen  vs.  Wasu Media Holding

Guangzhou Seagull Kitchen

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Seagull Kitchen are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Seagull sustained solid returns over the last few months and may actually be approaching a breakup point.

Wasu Media Holding

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wasu Media Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wasu Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangzhou Seagull and Wasu Media

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

The idea behind Guangzhou Seagull Kitchen and Wasu Media Holding 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.