Correlation Between Ye Chiu and Guangdong Marubi

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Can any of the company-specific risk be diversified away by investing in both Ye Chiu and Guangdong Marubi 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 Ye Chiu and Guangdong Marubi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ye Chiu Metal and Guangdong Marubi Biotechnology, you can compare the effects of market volatilities on Ye Chiu and Guangdong Marubi 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 Ye Chiu with a short position of Guangdong Marubi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ye Chiu and Guangdong Marubi.

Diversification Opportunities for Ye Chiu and Guangdong Marubi

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between 601388 and Guangdong is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ye Chiu Metal and Guangdong Marubi Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Marubi Bio and Ye Chiu 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 Ye Chiu Metal are associated (or correlated) with Guangdong Marubi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Marubi Bio has no effect on the direction of Ye Chiu i.e., Ye Chiu and Guangdong Marubi go up and down completely randomly.

Pair Corralation between Ye Chiu and Guangdong Marubi

Assuming the 90 days trading horizon Ye Chiu is expected to generate 1.87 times less return on investment than Guangdong Marubi. But when comparing it to its historical volatility, Ye Chiu Metal is 1.09 times less risky than Guangdong Marubi. It trades about 0.16 of its potential returns per unit of risk. Guangdong Marubi Biotechnology is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,132  in Guangdong Marubi Biotechnology on September 23, 2024 and sell it today you would earn a total of  1,485  from holding Guangdong Marubi Biotechnology or generate 69.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Ye Chiu Metal  vs.  Guangdong Marubi Biotechnology

 Performance 
       Timeline  
Ye Chiu Metal 

Risk-Adjusted Performance

12 of 100

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

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Marubi Biotechnology are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Marubi sustained solid returns over the last few months and may actually be approaching a breakup point.

Ye Chiu and Guangdong Marubi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ye Chiu and Guangdong Marubi

The main advantage of trading using opposite Ye Chiu and Guangdong Marubi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ye Chiu position performs unexpectedly, Guangdong Marubi 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 Marubi will offset losses from the drop in Guangdong Marubi's long position.
The idea behind Ye Chiu Metal and Guangdong Marubi Biotechnology 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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