Correlation Between Guangdong Jingyi and Strait Innovation

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Can any of the company-specific risk be diversified away by investing in both Guangdong Jingyi and Strait Innovation 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 Strait Innovation 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 Strait Innovation Internet, you can compare the effects of market volatilities on Guangdong Jingyi and Strait Innovation 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 Strait Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and Strait Innovation.

Diversification Opportunities for Guangdong Jingyi and Strait Innovation

GuangdongStraitDiversified AwayGuangdongStraitDiversified Away100%
0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Guangdong and Strait is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Strait Innovation Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strait Innovation 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 Strait Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strait Innovation has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Strait Innovation go up and down completely randomly.

Pair Corralation between Guangdong Jingyi and Strait Innovation

Assuming the 90 days trading horizon Guangdong Jingyi is expected to generate 3.88 times less return on investment than Strait Innovation. But when comparing it to its historical volatility, Guangdong Jingyi Metal is 1.47 times less risky than Strait Innovation. It trades about 0.03 of its potential returns per unit of risk. Strait Innovation Internet is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  234.00  in Strait Innovation Internet on October 5, 2024 and sell it today you would earn a total of  40.00  from holding Strait Innovation Internet or generate 17.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Guangdong Jingyi Metal  vs.  Strait Innovation Internet

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-10010203040
JavaScript chart by amCharts 3.21.15002295 300300
       Timeline  
Guangdong Jingyi Metal 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Guangdong Jingyi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan5.566.577.58
Strait Innovation 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Strait Innovation Internet are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Strait Innovation sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2.22.42.62.833.23.43.6

Guangdong Jingyi and Strait Innovation Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.64-7.22-4.8-2.380.02.434.957.479.9812.5 0.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15002295 300300
       Returns  

Pair Trading with Guangdong Jingyi and Strait Innovation

The main advantage of trading using opposite Guangdong Jingyi and Strait Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jingyi position performs unexpectedly, Strait Innovation 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 Strait Innovation will offset losses from the drop in Strait Innovation's long position.
The idea behind Guangdong Jingyi Metal and Strait Innovation Internet 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.
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 CEOs Directory module to screen CEOs from public companies around the world.

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