Correlation Between China Publishing and Guangzhou Ruoyuchen

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

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

Diversification Opportunities for China Publishing and Guangzhou Ruoyuchen

0.95

Correlation Coefficient

China Publishing  Guangzhou Ruoyuchen

Almost no diversification

The 3 months correlation between China and Guangzhou is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding China Publishing Media and Guangzhou Ruoyuchen Informatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Ruoyuchen and China Publishing 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 China Publishing Media 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 China Publishing i.e., China Publishing and Guangzhou Ruoyuchen go up and down completely randomly.

Pair Corralation between China Publishing and Guangzhou Ruoyuchen

Assuming the 90 days trading horizon China Publishing is expected to generate 1.64 times less return on investment than Guangzhou Ruoyuchen. In addition to that, China Publishing is 1.06 times more volatile than Guangzhou Ruoyuchen Information. It trades about 0.22 of its total potential returns per unit of risk. Guangzhou Ruoyuchen Information is currently generating about 0.38 per unit of volatility. If you would invest  1,590  in Guangzhou Ruoyuchen Information on September 4, 2024 and sell it today you would earn a total of  687.00  from holding Guangzhou Ruoyuchen Information or generate 43.21% return on investment over 90 days.

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

China Publishing Media  vs.  Guangzhou Ruoyuchen Informatio

China Publishing Media

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Publishing Media are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Publishing sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangzhou Ruoyuchen

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Ruoyuchen Information are ranked lower than 23 (%) 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 China Publishing and Guangzhou Ruoyuchen

The main advantage of trading using opposite China Publishing and Guangzhou Ruoyuchen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Publishing 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 China Publishing Media 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.