Correlation Between Agricultural Bank and Guangdong Skychem

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

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

Diversification Opportunities for Agricultural Bank and Guangdong Skychem

0.06

Correlation Coefficient

Agricultural Bank  Guangdong Skychem

Significant diversification

The 3 months correlation between Agricultural and Guangdong is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank of and Guangdong Skychem Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Skychem and Agricultural Bank 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 Agricultural Bank of are associated (or correlated) with Guangdong Skychem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Skychem has no effect on the direction of Agricultural Bank i.e., Agricultural Bank and Guangdong Skychem go up and down completely randomly.

Pair Corralation between Agricultural Bank and Guangdong Skychem

Assuming the 90 days trading horizon Agricultural Bank of is expected to generate 0.36 times more return on investment than Guangdong Skychem. However, Agricultural Bank of is 2.75 times less risky than Guangdong Skychem. It trades about 0.08 of its potential returns per unit of risk. Guangdong Skychem Technology is currently generating about 0.0 per unit of risk. If you would invest  497.00  in Agricultural Bank of on October 12, 2024 and sell it today you would earn a total of  13.00  from holding Agricultural Bank of or generate 2.62% return on investment over 90 days.

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

Agricultural Bank of  vs.  Guangdong Skychem Technology

Agricultural Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agricultural Bank of are ranked lower than 1 (%) 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.

Guangdong Skychem

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Skychem Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Skychem sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agricultural Bank and Guangdong Skychem

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

The idea behind Agricultural Bank of and Guangdong Skychem 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.