Correlation Between Guangzhou Ruoyuchen and China Life

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

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

Diversification Opportunities for Guangzhou Ruoyuchen and China Life

-0.6

Correlation Coefficient

Guangzhou Ruoyuchen  China Life

Excellent diversification

The 3 months correlation between Guangzhou and China is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Ruoyuchen Informatio and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and Guangzhou Ruoyuchen 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 Ruoyuchen Information are associated (or correlated) with China Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of Guangzhou Ruoyuchen i.e., Guangzhou Ruoyuchen and China Life go up and down completely randomly.

Pair Corralation between Guangzhou Ruoyuchen and China Life

Assuming the 90 days trading horizon Guangzhou Ruoyuchen Information is expected to generate 2.9 times more return on investment than China Life. However, Guangzhou Ruoyuchen is 2.9 times more volatile than China Life Insurance. It trades about 0.06 of its potential returns per unit of risk. China Life Insurance is currently generating about -0.12 per unit of risk. If you would invest  2,789  in Guangzhou Ruoyuchen Information on October 24, 2024 and sell it today you would earn a total of  103.00  from holding Guangzhou Ruoyuchen Information or generate 3.69% return on investment over 90 days.

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

Guangzhou Ruoyuchen Informatio  vs.  China Life Insurance

Guangzhou Ruoyuchen

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Ruoyuchen Information are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Ruoyuchen sustained solid returns over the last few months and may actually be approaching a breakup point.

China Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Guangzhou Ruoyuchen and China Life

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

The idea behind Guangzhou Ruoyuchen Information and China Life Insurance 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.