Correlation Between Guosheng Financial and Dongguan Chitwing

Can any of the company-specific risk be diversified away by investing in both Guosheng Financial and Dongguan Chitwing 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 Guosheng Financial and Dongguan Chitwing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guosheng Financial Holding and Dongguan Chitwing Technology, you can compare the effects of market volatilities on Guosheng Financial and Dongguan Chitwing 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 Guosheng Financial with a short position of Dongguan Chitwing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guosheng Financial and Dongguan Chitwing.

Diversification Opportunities for Guosheng Financial and Dongguan Chitwing

-0.06

Correlation Coefficient

Guosheng Financial  Dongguan Chitwing

Good diversification

The 3 months correlation between Guosheng and Dongguan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Guosheng Financial Holding and Dongguan Chitwing Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongguan Chitwing and Guosheng Financial 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 Guosheng Financial Holding are associated (or correlated) with Dongguan Chitwing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongguan Chitwing has no effect on the direction of Guosheng Financial i.e., Guosheng Financial and Dongguan Chitwing go up and down completely randomly.

Pair Corralation between Guosheng Financial and Dongguan Chitwing

Assuming the 90 days trading horizon Guosheng Financial Holding is expected to generate 1.44 times more return on investment than Dongguan Chitwing. However, Guosheng Financial is 1.44 times more volatile than Dongguan Chitwing Technology. It trades about 0.04 of its potential returns per unit of risk. Dongguan Chitwing Technology is currently generating about -0.07 per unit of risk. If you would invest  1,325  in Guosheng Financial Holding on December 2, 2024 and sell it today you would earn a total of  77.00  from holding Guosheng Financial Holding or generate 5.81% return on investment over 90 days.

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

Guosheng Financial Holding  vs.  Dongguan Chitwing Technology

Guosheng Financial

Risk-Adjusted Performance

Insignificant

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

Dongguan Chitwing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dongguan Chitwing 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Guosheng Financial and Dongguan Chitwing

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

The idea behind Guosheng Financial Holding and Dongguan Chitwing 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..