Correlation Between Guangdong Jingyi and Postal Savings

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

Diversification Opportunities for Guangdong Jingyi and Postal Savings

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Guangdong and Postal is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Postal Savings go up and down completely randomly.

Pair Corralation between Guangdong Jingyi and Postal Savings

Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to generate 1.44 times more return on investment than Postal Savings. However, Guangdong Jingyi is 1.44 times more volatile than Postal Savings Bank. It trades about 0.19 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.09 per unit of risk. If you would invest  709.00  in Guangdong Jingyi Metal on September 22, 2024 and sell it today you would earn a total of  52.00  from holding Guangdong Jingyi Metal or generate 7.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Guangdong Jingyi Metal  vs.  Postal Savings Bank

 Performance 
       Timeline  
Guangdong Jingyi Metal 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 20 (%) 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.
Postal Savings Bank 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Postal Savings sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Jingyi and Postal Savings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guangdong Jingyi and Postal Savings

The main advantage of trading using opposite Guangdong Jingyi and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jingyi position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' long position.
The idea behind Guangdong Jingyi Metal and Postal Savings Bank 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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