Correlation Between Guizhou BroadcastingTV and Cangzhou Mingzhu

Can any of the company-specific risk be diversified away by investing in both Guizhou BroadcastingTV and Cangzhou Mingzhu 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 Guizhou BroadcastingTV and Cangzhou Mingzhu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guizhou BroadcastingTV Info and Cangzhou Mingzhu Plastic, you can compare the effects of market volatilities on Guizhou BroadcastingTV and Cangzhou Mingzhu 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 Guizhou BroadcastingTV with a short position of Cangzhou Mingzhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guizhou BroadcastingTV and Cangzhou Mingzhu.

Diversification Opportunities for Guizhou BroadcastingTV and Cangzhou Mingzhu

0.86

Correlation Coefficient

Guizhou BroadcastingTV  Cangzhou Mingzhu

Very poor diversification

The 3 months correlation between Guizhou and Cangzhou is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Guizhou BroadcastingTV Info and Cangzhou Mingzhu Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cangzhou Mingzhu Plastic and Guizhou BroadcastingTV 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 Guizhou BroadcastingTV Info are associated (or correlated) with Cangzhou Mingzhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cangzhou Mingzhu Plastic has no effect on the direction of Guizhou BroadcastingTV i.e., Guizhou BroadcastingTV and Cangzhou Mingzhu go up and down completely randomly.

Pair Corralation between Guizhou BroadcastingTV and Cangzhou Mingzhu

Assuming the 90 days trading horizon Guizhou BroadcastingTV Info is expected to generate 1.07 times more return on investment than Cangzhou Mingzhu. However, Guizhou BroadcastingTV is 1.07 times more volatile than Cangzhou Mingzhu Plastic. It trades about 0.15 of its potential returns per unit of risk. Cangzhou Mingzhu Plastic is currently generating about 0.15 per unit of risk. If you would invest  757.00  in Guizhou BroadcastingTV Info on September 20, 2024 and sell it today you would earn a total of  205.00  from holding Guizhou BroadcastingTV Info or generate 27.08% return on investment over 90 days.

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

Guizhou BroadcastingTV Info  vs.  Cangzhou Mingzhu Plastic

Guizhou BroadcastingTV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guizhou BroadcastingTV Info are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guizhou BroadcastingTV sustained solid returns over the last few months and may actually be approaching a breakup point.

Cangzhou Mingzhu Plastic

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cangzhou Mingzhu Plastic are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cangzhou Mingzhu sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guizhou BroadcastingTV and Cangzhou Mingzhu

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

The idea behind Guizhou BroadcastingTV Info and Cangzhou Mingzhu Plastic 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.