Correlation Between Gladstone Investment and China Resources
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and China Resources 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 Gladstone Investment and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and China Resources Beer, you can compare the effects of market volatilities on Gladstone Investment and China Resources 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 Gladstone Investment with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and China Resources.
Diversification Opportunities for Gladstone Investment and China Resources
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gladstone and China is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and China Resources go up and down completely randomly.
Pair Corralation between Gladstone Investment and China Resources
Assuming the 90 days horizon Gladstone Investment is expected to generate 0.5 times more return on investment than China Resources. However, Gladstone Investment is 2.0 times less risky than China Resources. It trades about 0.05 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.01 per unit of risk. If you would invest 870.00 in Gladstone Investment on September 20, 2024 and sell it today you would earn a total of 383.00 from holding Gladstone Investment or generate 44.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Gladstone Investment vs. China Resources Beer
Performance |
Timeline |
Gladstone Investment |
China Resources Beer |
Gladstone Investment and China Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gladstone Investment and China Resources
The main advantage of trading using opposite Gladstone Investment and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, China Resources 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 Resources will offset losses from the drop in China Resources' long position.Gladstone Investment vs. Lyxor 1 | Gladstone Investment vs. Xtrackers ShortDAX | Gladstone Investment vs. Xtrackers LevDAX |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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