Correlation Between Guangdong Jingyi and East Money

Can any of the company-specific risk be diversified away by investing in both Guangdong Jingyi and East Money 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 Guangdong Jingyi and East Money into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangdong Jingyi Metal and East Money Information, you can compare the effects of market volatilities on Guangdong Jingyi and East Money 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 Guangdong Jingyi with a short position of East Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and East Money.

Diversification Opportunities for Guangdong Jingyi and East Money

0.83

Correlation Coefficient

Guangdong Jingyi  East Money

Very poor diversification

The 3 months correlation between Guangdong and East is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and East Money Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Money Information and Guangdong Jingyi 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 Guangdong Jingyi Metal are associated (or correlated) with East Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Money Information has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and East Money go up and down completely randomly.

Pair Corralation between Guangdong Jingyi and East Money

Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to generate 1.22 times more return on investment than East Money. However, Guangdong Jingyi is 1.22 times more volatile than East Money Information. It trades about -0.24 of its potential returns per unit of risk. East Money Information is currently generating about -0.38 per unit of risk. If you would invest  764.00  in Guangdong Jingyi Metal on October 11, 2024 and sell it today you would lose (121.00) from holding Guangdong Jingyi Metal or give up 15.84% of portfolio value over 90 days.

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

Guangdong Jingyi Metal  vs.  East Money Information

Guangdong Jingyi Metal

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi sustained solid returns over the last few months and may actually be approaching a breakup point.

East Money Information

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in East Money Information are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, East Money sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangdong Jingyi and East Money

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

The idea behind Guangdong Jingyi Metal and East Money Information 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.