Correlation Between Guangzhou Hongli and Universal Scientific

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

By analyzing existing cross correlation between Guangzhou Hongli Opto and Universal Scientific Industrial, you can compare the effects of market volatilities on Guangzhou Hongli and Universal Scientific 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 Hongli with a short position of Universal Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Hongli and Universal Scientific.

Diversification Opportunities for Guangzhou Hongli and Universal Scientific

0.0

Correlation Coefficient

Guangzhou Hongli  Universal Scientific

Pay attention - limited upside

The 3 months correlation between Guangzhou and Universal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Hongli Opto and Universal Scientific Industria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Scientific and Guangzhou Hongli 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 Hongli Opto are associated (or correlated) with Universal Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Scientific has no effect on the direction of Guangzhou Hongli i.e., Guangzhou Hongli and Universal Scientific go up and down completely randomly.

Pair Corralation between Guangzhou Hongli and Universal Scientific

If you would invest  1,694  in Universal Scientific Industrial on December 28, 2024 and sell it today you would earn a total of  9.00  from holding Universal Scientific Industrial or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Guangzhou Hongli Opto  vs.  Universal Scientific Industria

Guangzhou Hongli Opto

Risk-Adjusted Performance

Very Weak

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

Universal Scientific

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Scientific Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Universal Scientific 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 Hongli and Universal Scientific

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

The idea behind Guangzhou Hongli Opto and Universal Scientific Industrial 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.