Correlation Between Guangdong Silvere and Gotion High

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

By analyzing existing cross correlation between Guangdong Silvere Sci and Gotion High tech, you can compare the effects of market volatilities on Guangdong Silvere and Gotion High 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 Guangdong Silvere with a short position of Gotion High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Silvere and Gotion High.

Diversification Opportunities for Guangdong Silvere and Gotion High

0.64

Correlation Coefficient

Guangdong Silvere  Gotion High

Poor diversification

The 3 months correlation between Guangdong and Gotion is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Silvere Sci and Gotion High tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotion High tech and Guangdong Silvere 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 Guangdong Silvere Sci are associated (or correlated) with Gotion High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotion High tech has no effect on the direction of Guangdong Silvere i.e., Guangdong Silvere and Gotion High go up and down completely randomly.

Pair Corralation between Guangdong Silvere and Gotion High

Assuming the 90 days trading horizon Guangdong Silvere Sci is expected to under-perform the Gotion High. In addition to that, Guangdong Silvere is 1.83 times more volatile than Gotion High tech. It trades about -0.35 of its total potential returns per unit of risk. Gotion High tech is currently generating about -0.32 per unit of volatility. If you would invest  2,257  in Gotion High tech on October 12, 2024 and sell it today you would lose (245.00) from holding Gotion High tech or give up 10.86% of portfolio value over 90 days.

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

Guangdong Silvere Sci  vs.  Gotion High tech

Guangdong Silvere Sci

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gotion High tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gotion High tech 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 Guangdong Silvere and Gotion High

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

The idea behind Guangdong Silvere Sci and Gotion High tech 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.