Correlation Between Hithink RoyalFlush and Guangdong Marubi

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

By analyzing existing cross correlation between Hithink RoyalFlush Info and Guangdong Marubi Biotechnology, you can compare the effects of market volatilities on Hithink RoyalFlush and Guangdong Marubi 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 Hithink RoyalFlush with a short position of Guangdong Marubi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hithink RoyalFlush and Guangdong Marubi.

Diversification Opportunities for Hithink RoyalFlush and Guangdong Marubi

0.85

Correlation Coefficient

Hithink RoyalFlush  Guangdong Marubi

Very poor diversification

The 3 months correlation between Hithink and Guangdong is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hithink RoyalFlush Info and Guangdong Marubi Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Marubi Bio and Hithink RoyalFlush 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 Hithink RoyalFlush Info are associated (or correlated) with Guangdong Marubi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Marubi Bio has no effect on the direction of Hithink RoyalFlush i.e., Hithink RoyalFlush and Guangdong Marubi go up and down completely randomly.

Pair Corralation between Hithink RoyalFlush and Guangdong Marubi

Assuming the 90 days trading horizon Hithink RoyalFlush Info is expected to generate 2.53 times more return on investment than Guangdong Marubi. However, Hithink RoyalFlush is 2.53 times more volatile than Guangdong Marubi Biotechnology. It trades about 0.3 of its potential returns per unit of risk. Guangdong Marubi Biotechnology is currently generating about 0.22 per unit of risk. If you would invest  10,006  in Hithink RoyalFlush Info on September 4, 2024 and sell it today you would earn a total of  22,688  from holding Hithink RoyalFlush Info or generate 226.74% return on investment over 90 days.

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

Hithink RoyalFlush Info  vs.  Guangdong Marubi Biotechnology

Hithink RoyalFlush Info

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hithink RoyalFlush Info are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hithink RoyalFlush sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Marubi Bio

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Marubi Biotechnology are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Marubi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hithink RoyalFlush and Guangdong Marubi

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

The idea behind Hithink RoyalFlush Info and Guangdong Marubi Biotechnology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.