Correlation Between Guilin Seamild and Industrial

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

By analyzing existing cross correlation between Guilin Seamild Foods and Industrial and Commercial, you can compare the effects of market volatilities on Guilin Seamild and Industrial 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 Guilin Seamild with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guilin Seamild and Industrial.

Diversification Opportunities for Guilin Seamild and Industrial

0.16

Correlation Coefficient

Guilin Seamild  Industrial

Average diversification

The 3 months correlation between Guilin and Industrial is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Guilin Seamild Foods and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Guilin Seamild 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 Guilin Seamild Foods are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Guilin Seamild i.e., Guilin Seamild and Industrial go up and down completely randomly.

Pair Corralation between Guilin Seamild and Industrial

Assuming the 90 days trading horizon Guilin Seamild Foods is expected to under-perform the Industrial. In addition to that, Guilin Seamild is 2.09 times more volatile than Industrial and Commercial. It trades about -0.01 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about -0.01 per unit of volatility. If you would invest  692.00  in Industrial and Commercial on December 27, 2024 and sell it today you would lose (9.00) from holding Industrial and Commercial or give up 1.3% of portfolio value over 90 days.

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

Guilin Seamild Foods  vs.  Industrial and Commercial

Guilin Seamild Foods

Risk-Adjusted Performance

Very Weak

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

Industrial and Commercial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Guilin Seamild and Industrial

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

The idea behind Guilin Seamild Foods and Industrial and Commercial 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.