Correlation Between Industrial and GUOMAI Culture

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

By analyzing existing cross correlation between Industrial and Commercial and GUOMAI Culture Media, you can compare the effects of market volatilities on Industrial and GUOMAI Culture 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 Industrial with a short position of GUOMAI Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial and GUOMAI Culture.

Diversification Opportunities for Industrial and GUOMAI Culture

0.48

Correlation Coefficient

Industrial  GUOMAI Culture

Very weak diversification

The 3 months correlation between Industrial and GUOMAI is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and GUOMAI Culture Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOMAI Culture Media and Industrial 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 Industrial and Commercial are associated (or correlated) with GUOMAI Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOMAI Culture Media has no effect on the direction of Industrial i.e., Industrial and GUOMAI Culture go up and down completely randomly.

Pair Corralation between Industrial and GUOMAI Culture

Assuming the 90 days trading horizon Industrial and Commercial is expected to under-perform the GUOMAI Culture. But the stock apears to be less risky and, when comparing its historical volatility, Industrial and Commercial is 3.06 times less risky than GUOMAI Culture. The stock trades about -0.01 of its potential returns per unit of risk. The GUOMAI Culture Media is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,688  in GUOMAI Culture Media on December 27, 2024 and sell it today you would earn a total of  147.00  from holding GUOMAI Culture Media or generate 5.47% return on investment over 90 days.

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

Industrial and Commercial  vs.  GUOMAI Culture Media

Industrial and Commercial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industrial and Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GUOMAI Culture Media

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GUOMAI Culture Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GUOMAI Culture may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Industrial and GUOMAI Culture

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

The idea behind Industrial and Commercial and GUOMAI Culture Media 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.