Correlation Between Guangdong Marubi and Soochow Securities

Can any of the company-specific risk be diversified away by investing in both Guangdong Marubi and Soochow Securities 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 Soochow Securities 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 Soochow Securities Co, you can compare the effects of market volatilities on Guangdong Marubi and Soochow Securities 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 Soochow Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Marubi and Soochow Securities.

Diversification Opportunities for Guangdong Marubi and Soochow Securities

0.04

Correlation Coefficient

Guangdong Marubi  Soochow Securities

Significant diversification

The 3 months correlation between Guangdong and Soochow is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Marubi Biotechnology and Soochow Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soochow Securities 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 Soochow Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soochow Securities has no effect on the direction of Guangdong Marubi i.e., Guangdong Marubi and Soochow Securities go up and down completely randomly.

Pair Corralation between Guangdong Marubi and Soochow Securities

Assuming the 90 days trading horizon Guangdong Marubi Biotechnology is expected to generate 2.13 times more return on investment than Soochow Securities. However, Guangdong Marubi is 2.13 times more volatile than Soochow Securities Co. It trades about 0.11 of its potential returns per unit of risk. Soochow Securities Co is currently generating about -0.3 per unit of risk. If you would invest  2,927  in Guangdong Marubi Biotechnology on October 8, 2024 and sell it today you would earn a total of  205.00  from holding Guangdong Marubi Biotechnology or generate 7.0% return on investment over 90 days.

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

Guangdong Marubi Biotechnology  vs.  Soochow Securities Co

Guangdong Marubi Bio

Risk-Adjusted Performance

3 of 100

Insignificant

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

Soochow Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soochow Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Guangdong Marubi and Soochow Securities

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

The idea behind Guangdong Marubi Biotechnology and Soochow Securities Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.