Correlation Between Servyou Software and Guangzhou Zhujiang

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

Diversification Opportunities for Servyou Software and Guangzhou Zhujiang

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Servyou and Guangzhou is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Servyou Software Group and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang and Servyou Software 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 Servyou Software Group are associated (or correlated) with Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Servyou Software i.e., Servyou Software and Guangzhou Zhujiang go up and down completely randomly.

Pair Corralation between Servyou Software and Guangzhou Zhujiang

Assuming the 90 days trading horizon Servyou Software is expected to generate 1.24 times less return on investment than Guangzhou Zhujiang. In addition to that, Servyou Software is 1.94 times more volatile than Guangzhou Zhujiang Brewery. It trades about 0.02 of its total potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about 0.04 per unit of volatility. If you would invest  816.00  in Guangzhou Zhujiang Brewery on September 21, 2024 and sell it today you would earn a total of  129.00  from holding Guangzhou Zhujiang Brewery or generate 15.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Servyou Software Group  vs.  Guangzhou Zhujiang Brewery

 Performance 
       Timeline  
Servyou Software 

Risk-Adjusted Performance

12 of 100

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

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Zhujiang Brewery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Zhujiang sustained solid returns over the last few months and may actually be approaching a breakup point.

Servyou Software and Guangzhou Zhujiang Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Servyou Software and Guangzhou Zhujiang

The main advantage of trading using opposite Servyou Software and Guangzhou Zhujiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Servyou Software position performs unexpectedly, Guangzhou Zhujiang 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 Zhujiang will offset losses from the drop in Guangzhou Zhujiang's long position.
The idea behind Servyou Software Group and Guangzhou Zhujiang Brewery 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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