Correlation Between Guodian Nanjing and Agricultural Bank

Can any of the company-specific risk be diversified away by investing in both Guodian Nanjing and Agricultural Bank 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 Guodian Nanjing and Agricultural Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guodian Nanjing Automation and Agricultural Bank of, you can compare the effects of market volatilities on Guodian Nanjing and Agricultural Bank 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 Guodian Nanjing with a short position of Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guodian Nanjing and Agricultural Bank.

Diversification Opportunities for Guodian Nanjing and Agricultural Bank

0.17

Correlation Coefficient

Guodian Nanjing  Agricultural Bank

Average diversification

The 3 months correlation between Guodian and Agricultural is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Guodian Nanjing Automation and Agricultural Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank and Guodian Nanjing 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 Guodian Nanjing Automation are associated (or correlated) with Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Guodian Nanjing i.e., Guodian Nanjing and Agricultural Bank go up and down completely randomly.

Pair Corralation between Guodian Nanjing and Agricultural Bank

Assuming the 90 days trading horizon Guodian Nanjing Automation is expected to generate 1.5 times more return on investment than Agricultural Bank. However, Guodian Nanjing is 1.5 times more volatile than Agricultural Bank of. It trades about 0.05 of its potential returns per unit of risk. Agricultural Bank of is currently generating about 0.07 per unit of risk. If you would invest  702.00  in Guodian Nanjing Automation on December 3, 2024 and sell it today you would earn a total of  33.00  from holding Guodian Nanjing Automation or generate 4.7% return on investment over 90 days.

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

Guodian Nanjing Automation  vs.  Agricultural Bank of

Guodian Nanjing Auto

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guodian Nanjing Automation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Guodian Nanjing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Agricultural Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agricultural Bank of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Agricultural Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guodian Nanjing and Agricultural Bank

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

The idea behind Guodian Nanjing Automation and Agricultural Bank of 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.