Correlation Between Guangzhou Haozhi and Gem-Year Industrial

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

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

Diversification Opportunities for Guangzhou Haozhi and Gem-Year Industrial

0.95

Correlation Coefficient

Guangzhou Haozhi  Gem-Year Industrial

Almost no diversification

The 3 months correlation between Guangzhou and Gem-Year is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Haozhi Industrial and Gem Year Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gem Year Industrial and Guangzhou Haozhi 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 Haozhi Industrial are associated (or correlated) with Gem-Year Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gem Year Industrial has no effect on the direction of Guangzhou Haozhi i.e., Guangzhou Haozhi and Gem-Year Industrial go up and down completely randomly.

Pair Corralation between Guangzhou Haozhi and Gem-Year Industrial

Assuming the 90 days trading horizon Guangzhou Haozhi Industrial is expected to generate 1.76 times more return on investment than Gem-Year Industrial. However, Guangzhou Haozhi is 1.76 times more volatile than Gem Year Industrial Co. It trades about 0.12 of its potential returns per unit of risk. Gem Year Industrial Co is currently generating about 0.09 per unit of risk. If you would invest  2,073  in Guangzhou Haozhi Industrial on December 25, 2024 and sell it today you would earn a total of  572.00  from holding Guangzhou Haozhi Industrial or generate 27.59% return on investment over 90 days.

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

Guangzhou Haozhi Industrial  vs.  Gem Year Industrial Co

Guangzhou Haozhi Ind

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Haozhi Industrial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Haozhi sustained solid returns over the last few months and may actually be approaching a breakup point.

Gem Year Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem-Year Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangzhou Haozhi and Gem-Year Industrial

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

The idea behind Guangzhou Haozhi Industrial and Gem Year Industrial Co 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.