Correlation Between Guangzhou Fangbang and V V

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

By analyzing existing cross correlation between Guangzhou Fangbang Electronics and V V Food, you can compare the effects of market volatilities on Guangzhou Fangbang and V V 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 Guangzhou Fangbang with a short position of V V. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Fangbang and V V.

Diversification Opportunities for Guangzhou Fangbang and V V

0.15

Correlation Coefficient

Guangzhou Fangbang  V V

Average diversification

The 3 months correlation between Guangzhou and 600300 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Fangbang Electronics and V V Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V V Food and Guangzhou Fangbang 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 Guangzhou Fangbang Electronics are associated (or correlated) with V V. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V V Food has no effect on the direction of Guangzhou Fangbang i.e., Guangzhou Fangbang and V V go up and down completely randomly.

Pair Corralation between Guangzhou Fangbang and V V

Assuming the 90 days trading horizon Guangzhou Fangbang Electronics is expected to under-perform the V V. In addition to that, Guangzhou Fangbang is 1.03 times more volatile than V V Food. It trades about -0.05 of its total potential returns per unit of risk. V V Food is currently generating about 0.02 per unit of volatility. If you would invest  293.00  in V V Food on October 26, 2024 and sell it today you would earn a total of  3.00  from holding V V Food or generate 1.02% return on investment over 90 days.

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

Guangzhou Fangbang Electronics  vs.  V V Food

Guangzhou Fangbang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou Fangbang Electronics 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.

V V Food

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in V V Food are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, V V is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guangzhou Fangbang and V V

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

The idea behind Guangzhou Fangbang Electronics and V V Food 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.