Correlation Between Guangzhou Jointas and Shanghai Metersbonwe

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

By analyzing existing cross correlation between Guangzhou Jointas Chemical and Shanghai Metersbonwe FashionAccessories, you can compare the effects of market volatilities on Guangzhou Jointas and Shanghai Metersbonwe 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 Jointas with a short position of Shanghai Metersbonwe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Jointas and Shanghai Metersbonwe.

Diversification Opportunities for Guangzhou Jointas and Shanghai Metersbonwe

0.02

Correlation Coefficient

Guangzhou Jointas  Shanghai Metersbonwe

Significant diversification

The 3 months correlation between Guangzhou and Shanghai is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Jointas Chemical and Shanghai Metersbonwe FashionAc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Metersbonwe and Guangzhou Jointas 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 Jointas Chemical are associated (or correlated) with Shanghai Metersbonwe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Metersbonwe has no effect on the direction of Guangzhou Jointas i.e., Guangzhou Jointas and Shanghai Metersbonwe go up and down completely randomly.

Pair Corralation between Guangzhou Jointas and Shanghai Metersbonwe

Assuming the 90 days trading horizon Guangzhou Jointas Chemical is expected to under-perform the Shanghai Metersbonwe. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou Jointas Chemical is 2.13 times less risky than Shanghai Metersbonwe. The stock trades about -0.02 of its potential returns per unit of risk. The Shanghai Metersbonwe FashionAccessories is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  222.00  in Shanghai Metersbonwe FashionAccessories on December 2, 2024 and sell it today you would lose (11.00) from holding Shanghai Metersbonwe FashionAccessories or give up 4.95% of portfolio value over 90 days.

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

Guangzhou Jointas Chemical  vs.  Shanghai Metersbonwe FashionAc

Guangzhou Jointas

Risk-Adjusted Performance

Very Weak

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

Shanghai Metersbonwe

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Metersbonwe FashionAccessories are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shanghai Metersbonwe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guangzhou Jointas and Shanghai Metersbonwe

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

The idea behind Guangzhou Jointas Chemical and Shanghai Metersbonwe FashionAccessories 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.