Correlation Between Guangdong Jingyi and Olympic Circuit

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

Diversification Opportunities for Guangdong Jingyi and Olympic Circuit

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Guangdong and Olympic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Olympic Circuit Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Circuit Tech 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 Olympic Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Circuit Tech has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Olympic Circuit go up and down completely randomly.

Pair Corralation between Guangdong Jingyi and Olympic Circuit

Assuming the 90 days trading horizon Guangdong Jingyi is expected to generate 20.26 times less return on investment than Olympic Circuit. But when comparing it to its historical volatility, Guangdong Jingyi Metal is 1.15 times less risky than Olympic Circuit. It trades about 0.0 of its potential returns per unit of risk. Olympic Circuit Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,507  in Olympic Circuit Technology on October 10, 2024 and sell it today you would earn a total of  1,424  from holding Olympic Circuit Technology or generate 94.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Guangdong Jingyi Metal  vs.  Olympic Circuit Technology

 Performance 
       Timeline  
Guangdong Jingyi Metal 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 6 (%) 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.
Olympic Circuit Tech 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Circuit Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Olympic Circuit sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Jingyi and Olympic Circuit Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guangdong Jingyi and Olympic Circuit

The main advantage of trading using opposite Guangdong Jingyi and Olympic Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jingyi position performs unexpectedly, Olympic Circuit 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 Olympic Circuit will offset losses from the drop in Olympic Circuit's long position.
The idea behind Guangdong Jingyi Metal and Olympic Circuit Technology 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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