Correlation Between Railway Signal and Guizhou BroadcastingTV

Can any of the company-specific risk be diversified away by investing in both Railway Signal and Guizhou BroadcastingTV 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 Railway Signal and Guizhou BroadcastingTV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Railway Signal Communication and Guizhou BroadcastingTV Info, you can compare the effects of market volatilities on Railway Signal and Guizhou BroadcastingTV 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 Railway Signal with a short position of Guizhou BroadcastingTV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Railway Signal and Guizhou BroadcastingTV.

Diversification Opportunities for Railway Signal and Guizhou BroadcastingTV

0.88

Correlation Coefficient

Railway Signal  Guizhou BroadcastingTV

Very poor diversification

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

Pair Corralation between Railway Signal and Guizhou BroadcastingTV

Assuming the 90 days trading horizon Railway Signal is expected to generate 1.07 times less return on investment than Guizhou BroadcastingTV. In addition to that, Railway Signal is 1.19 times more volatile than Guizhou BroadcastingTV Info. It trades about 0.13 of its total potential returns per unit of risk. Guizhou BroadcastingTV Info is currently generating about 0.17 per unit of volatility. If you would invest  758.00  in Guizhou BroadcastingTV Info on September 5, 2024 and sell it today you would earn a total of  224.00  from holding Guizhou BroadcastingTV Info or generate 29.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Railway Signal Communication  vs.  Guizhou BroadcastingTV Info

Railway Signal Commu

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Railway Signal Communication are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Railway Signal sustained solid returns over the last few months and may actually be approaching a breakup point.

Guizhou BroadcastingTV

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Railway Signal and Guizhou BroadcastingTV

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

The idea behind Railway Signal Communication and Guizhou BroadcastingTV Info 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.