Correlation Between Glodon Software and Guotai Epoint

Can any of the company-specific risk be diversified away by investing in both Glodon Software and Guotai Epoint 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 Glodon Software and Guotai Epoint into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Glodon Software Co and Guotai Epoint Software, you can compare the effects of market volatilities on Glodon Software and Guotai Epoint 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 Glodon Software with a short position of Guotai Epoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glodon Software and Guotai Epoint.

Diversification Opportunities for Glodon Software and Guotai Epoint

0.87

Correlation Coefficient

Glodon Software  Guotai Epoint

Very poor diversification

The 3 months correlation between Glodon and Guotai is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Glodon Software Co and Guotai Epoint Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guotai Epoint Software and Glodon Software 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 Glodon Software Co are associated (or correlated) with Guotai Epoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guotai Epoint Software has no effect on the direction of Glodon Software i.e., Glodon Software and Guotai Epoint go up and down completely randomly.

Pair Corralation between Glodon Software and Guotai Epoint

Assuming the 90 days trading horizon Glodon Software Co is expected to generate 0.87 times more return on investment than Guotai Epoint. However, Glodon Software Co is 1.15 times less risky than Guotai Epoint. It trades about 0.08 of its potential returns per unit of risk. Guotai Epoint Software is currently generating about 0.04 per unit of risk. If you would invest  1,205  in Glodon Software Co on December 25, 2024 and sell it today you would earn a total of  148.00  from holding Glodon Software Co or generate 12.28% return on investment over 90 days.

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

Glodon Software Co  vs.  Guotai Epoint Software

Glodon Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Glodon Software Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Glodon Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Guotai Epoint Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guotai Epoint Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guotai Epoint may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Glodon Software and Guotai Epoint

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

The idea behind Glodon Software Co and Guotai Epoint Software 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.