Correlation Between Guangdong Marubi and De Rucci

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

By analyzing existing cross correlation between Guangdong Marubi Biotechnology and De Rucci Healthy, you can compare the effects of market volatilities on Guangdong Marubi and De Rucci 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 Marubi with a short position of De Rucci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Marubi and De Rucci.

Diversification Opportunities for Guangdong Marubi and De Rucci

-0.2

Correlation Coefficient

Guangdong Marubi  De Rucci

Good diversification

The 3 months correlation between Guangdong and 001323 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Marubi Biotechnology and De Rucci Healthy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Rucci Healthy and Guangdong Marubi 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 Marubi Biotechnology are associated (or correlated) with De Rucci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Rucci Healthy has no effect on the direction of Guangdong Marubi i.e., Guangdong Marubi and De Rucci go up and down completely randomly.

Pair Corralation between Guangdong Marubi and De Rucci

Assuming the 90 days trading horizon Guangdong Marubi Biotechnology is expected to generate 1.33 times more return on investment than De Rucci. However, Guangdong Marubi is 1.33 times more volatile than De Rucci Healthy. It trades about 0.03 of its potential returns per unit of risk. De Rucci Healthy is currently generating about -0.1 per unit of risk. If you would invest  3,453  in Guangdong Marubi Biotechnology on December 26, 2024 and sell it today you would earn a total of  87.00  from holding Guangdong Marubi Biotechnology or generate 2.52% return on investment over 90 days.

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

Guangdong Marubi Biotechnology  vs.  De Rucci Healthy

Guangdong Marubi Bio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Marubi Biotechnology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Guangdong Marubi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

De Rucci Healthy

Risk-Adjusted Performance

Very Weak

Over the last 90 days De Rucci Healthy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Guangdong Marubi and De Rucci

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

The idea behind Guangdong Marubi Biotechnology and De Rucci Healthy 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.