Correlation Between Guangdong Ellington and Pengxin International

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

By analyzing existing cross correlation between Guangdong Ellington Electronics and Pengxin International Mining, you can compare the effects of market volatilities on Guangdong Ellington and Pengxin International 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 Guangdong Ellington with a short position of Pengxin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Ellington and Pengxin International.

Diversification Opportunities for Guangdong Ellington and Pengxin International

0.57

Correlation Coefficient

Guangdong Ellington  Pengxin International

Very weak diversification

The 3 months correlation between Guangdong and Pengxin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Ellington Electronic and Pengxin International Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pengxin International and Guangdong Ellington 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 Guangdong Ellington Electronics are associated (or correlated) with Pengxin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pengxin International has no effect on the direction of Guangdong Ellington i.e., Guangdong Ellington and Pengxin International go up and down completely randomly.

Pair Corralation between Guangdong Ellington and Pengxin International

Assuming the 90 days trading horizon Guangdong Ellington Electronics is expected to generate 0.84 times more return on investment than Pengxin International. However, Guangdong Ellington Electronics is 1.2 times less risky than Pengxin International. It trades about 0.04 of its potential returns per unit of risk. Pengxin International Mining is currently generating about 0.01 per unit of risk. If you would invest  693.00  in Guangdong Ellington Electronics on October 11, 2024 and sell it today you would earn a total of  232.00  from holding Guangdong Ellington Electronics or generate 33.48% return on investment over 90 days.

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

Guangdong Ellington Electronic  vs.  Pengxin International Mining

Guangdong Ellington

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pengxin International

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Guangdong Ellington and Pengxin International

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

The idea behind Guangdong Ellington Electronics and Pengxin International Mining 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.