Correlation Between Cinda Securities and Guangzhou Ruoyuchen

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

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

Diversification Opportunities for Cinda Securities and Guangzhou Ruoyuchen

-0.42

Correlation Coefficient

Cinda Securities  Guangzhou Ruoyuchen

Very good diversification

The 3 months correlation between Cinda and Guangzhou is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cinda Securities Co and Guangzhou Ruoyuchen Informatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Ruoyuchen and Cinda Securities 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 Cinda Securities Co are associated (or correlated) with Guangzhou Ruoyuchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Ruoyuchen has no effect on the direction of Cinda Securities i.e., Cinda Securities and Guangzhou Ruoyuchen go up and down completely randomly.

Pair Corralation between Cinda Securities and Guangzhou Ruoyuchen

Assuming the 90 days trading horizon Cinda Securities is expected to generate 2.87 times less return on investment than Guangzhou Ruoyuchen. But when comparing it to its historical volatility, Cinda Securities Co is 1.13 times less risky than Guangzhou Ruoyuchen. It trades about 0.03 of its potential returns per unit of risk. Guangzhou Ruoyuchen Information is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,269  in Guangzhou Ruoyuchen Information on October 23, 2024 and sell it today you would earn a total of  1,578  from holding Guangzhou Ruoyuchen Information or generate 124.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Cinda Securities Co  vs.  Guangzhou Ruoyuchen Informatio

Cinda Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cinda Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Guangzhou Ruoyuchen

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Ruoyuchen Information are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Ruoyuchen sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cinda Securities and Guangzhou Ruoyuchen

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

The idea behind Cinda Securities Co and Guangzhou Ruoyuchen Information 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.