Correlation Between Linewell Software and Guangzhou Shangpin

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

By analyzing existing cross correlation between Linewell Software Co and Guangzhou Shangpin Home, you can compare the effects of market volatilities on Linewell Software and Guangzhou Shangpin 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 Linewell Software with a short position of Guangzhou Shangpin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linewell Software and Guangzhou Shangpin.

Diversification Opportunities for Linewell Software and Guangzhou Shangpin

0.88

Correlation Coefficient

Linewell Software  Guangzhou Shangpin

Very poor diversification

The 3 months correlation between Linewell and Guangzhou is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Linewell Software Co and Guangzhou Shangpin Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Shangpin Home and Linewell 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 Linewell Software Co are associated (or correlated) with Guangzhou Shangpin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Shangpin Home has no effect on the direction of Linewell Software i.e., Linewell Software and Guangzhou Shangpin go up and down completely randomly.

Pair Corralation between Linewell Software and Guangzhou Shangpin

Assuming the 90 days trading horizon Linewell Software Co is expected to generate 1.55 times more return on investment than Guangzhou Shangpin. However, Linewell Software is 1.55 times more volatile than Guangzhou Shangpin Home. It trades about 0.21 of its potential returns per unit of risk. Guangzhou Shangpin Home is currently generating about 0.28 per unit of risk. If you would invest  1,023  in Linewell Software Co on September 5, 2024 and sell it today you would earn a total of  180.00  from holding Linewell Software Co or generate 17.6% return on investment over 90 days.

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

Linewell Software Co  vs.  Guangzhou Shangpin Home

Linewell Software

Risk-Adjusted Performance

14 of 100

Good

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

Guangzhou Shangpin Home

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Shangpin Home are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Shangpin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Linewell Software and Guangzhou Shangpin

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

The idea behind Linewell Software Co and Guangzhou Shangpin Home 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.