Correlation Between Guangdong Jinming and Long Yuan
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By analyzing existing cross correlation between Guangdong Jinming Machinery and Long Yuan Construction, you can compare the effects of market volatilities on Guangdong Jinming and Long Yuan 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 Jinming with a short position of Long Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jinming and Long Yuan.
Diversification Opportunities for Guangdong Jinming and Long Yuan
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Long is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jinming Machinery and Long Yuan Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Yuan Construction and Guangdong Jinming 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 Jinming Machinery are associated (or correlated) with Long Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Yuan Construction has no effect on the direction of Guangdong Jinming i.e., Guangdong Jinming and Long Yuan go up and down completely randomly.
Pair Corralation between Guangdong Jinming and Long Yuan
Assuming the 90 days trading horizon Guangdong Jinming Machinery is expected to under-perform the Long Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Guangdong Jinming Machinery is 1.13 times less risky than Long Yuan. The stock trades about -0.03 of its potential returns per unit of risk. The Long Yuan Construction is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 307.00 in Long Yuan Construction on October 9, 2024 and sell it today you would earn a total of 38.00 from holding Long Yuan Construction or generate 12.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Guangdong Jinming Machinery vs. Long Yuan Construction
Performance |
Timeline |
Guangdong Jinming |
Long Yuan Construction |
Guangdong Jinming and Long Yuan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guangdong Jinming and Long Yuan
The main advantage of trading using opposite Guangdong Jinming and Long Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jinming position performs unexpectedly, Long Yuan 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 Long Yuan will offset losses from the drop in Long Yuan's long position.Guangdong Jinming vs. Fujian Boss Software | ||
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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