Correlation Between Guangzhou Jinyi and East Money

Can any of the company-specific risk be diversified away by investing in both Guangzhou Jinyi and East Money 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 Guangzhou Jinyi and East Money into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangzhou Jinyi Media and East Money Information, you can compare the effects of market volatilities on Guangzhou Jinyi and East Money 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 Guangzhou Jinyi with a short position of East Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Jinyi and East Money.

Diversification Opportunities for Guangzhou Jinyi and East Money

0.62

Correlation Coefficient

Guangzhou Jinyi  East Money

Poor diversification

The 3 months correlation between Guangzhou and East is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Jinyi Media and East Money Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Money Information and Guangzhou Jinyi 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 Guangzhou Jinyi Media are associated (or correlated) with East Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Money Information has no effect on the direction of Guangzhou Jinyi i.e., Guangzhou Jinyi and East Money go up and down completely randomly.

Pair Corralation between Guangzhou Jinyi and East Money

Assuming the 90 days trading horizon Guangzhou Jinyi Media is expected to under-perform the East Money. In addition to that, Guangzhou Jinyi is 1.08 times more volatile than East Money Information. It trades about 0.0 of its total potential returns per unit of risk. East Money Information is currently generating about 0.03 per unit of volatility. If you would invest  1,931  in East Money Information on October 10, 2024 and sell it today you would earn a total of  370.00  from holding East Money Information or generate 19.16% return on investment over 90 days.

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

Guangzhou Jinyi Media  vs.  East Money Information

Guangzhou Jinyi Media

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Jinyi Media are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Jinyi sustained solid returns over the last few months and may actually be approaching a breakup point.

East Money Information

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Guangzhou Jinyi and East Money

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

The idea behind Guangzhou Jinyi Media and East Money Information 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.