Correlation Between Gudeng Precision and Integrated Service

Can any of the company-specific risk be diversified away by investing in both Gudeng Precision and Integrated Service 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 Gudeng Precision and Integrated Service into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gudeng Precision Industrial and Integrated Service Technology, you can compare the effects of market volatilities on Gudeng Precision and Integrated Service 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 Gudeng Precision with a short position of Integrated Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gudeng Precision and Integrated Service.

Diversification Opportunities for Gudeng Precision and Integrated Service

0.85

Correlation Coefficient

Gudeng Precision  Integrated Service

Very poor diversification

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

Pair Corralation between Gudeng Precision and Integrated Service

Assuming the 90 days trading horizon Gudeng Precision Industrial is expected to under-perform the Integrated Service. In addition to that, Gudeng Precision is 1.33 times more volatile than Integrated Service Technology. It trades about -0.12 of its total potential returns per unit of risk. Integrated Service Technology is currently generating about -0.08 per unit of volatility. If you would invest  13,900  in Integrated Service Technology on December 24, 2024 and sell it today you would lose (1,450) from holding Integrated Service Technology or give up 10.43% of portfolio value over 90 days.

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

Gudeng Precision Industrial  vs.  Integrated Service Technology

Gudeng Precision Ind

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gudeng Precision Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Integrated Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integrated Service Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Gudeng Precision and Integrated Service

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

The idea behind Gudeng Precision Industrial and Integrated Service Technology 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.