Correlation Between Guangdong Shenglu and Thunder Software

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

By analyzing existing cross correlation between Guangdong Shenglu Telecommunication and Thunder Software Technology, you can compare the effects of market volatilities on Guangdong Shenglu and Thunder Software 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 Shenglu with a short position of Thunder Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Shenglu and Thunder Software.

Diversification Opportunities for Guangdong Shenglu and Thunder Software

0.24

Correlation Coefficient

Guangdong Shenglu  Thunder Software

Modest diversification

The 3 months correlation between Guangdong and Thunder is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Shenglu Telecommunic and Thunder Software Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Software Tec and Guangdong Shenglu 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 Shenglu Telecommunication are associated (or correlated) with Thunder Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Software Tec has no effect on the direction of Guangdong Shenglu i.e., Guangdong Shenglu and Thunder Software go up and down completely randomly.

Pair Corralation between Guangdong Shenglu and Thunder Software

Assuming the 90 days trading horizon Guangdong Shenglu is expected to generate 43.71 times less return on investment than Thunder Software. But when comparing it to its historical volatility, Guangdong Shenglu Telecommunication is 1.55 times less risky than Thunder Software. It trades about 0.0 of its potential returns per unit of risk. Thunder Software Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,601  in Thunder Software Technology on October 9, 2024 and sell it today you would earn a total of  705.00  from holding Thunder Software Technology or generate 15.32% return on investment over 90 days.

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

Guangdong Shenglu Telecommunic  vs.  Thunder Software Technology

Guangdong Shenglu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangdong Shenglu Telecommunication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangdong Shenglu is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thunder Software Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thunder Software Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Guangdong Shenglu and Thunder Software

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

The idea behind Guangdong Shenglu Telecommunication and Thunder Software 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.