Correlation Between Guangzhou Fangbang and GalaxyCore

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

Diversification Opportunities for Guangzhou Fangbang and GalaxyCore

0.88

Correlation Coefficient

Guangzhou Fangbang  GalaxyCore

Very poor diversification

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

Pair Corralation between Guangzhou Fangbang and GalaxyCore

Assuming the 90 days trading horizon Guangzhou Fangbang Electronics is expected to generate 0.94 times more return on investment than GalaxyCore. However, Guangzhou Fangbang Electronics is 1.06 times less risky than GalaxyCore. It trades about 0.07 of its potential returns per unit of risk. GalaxyCore is currently generating about -0.21 per unit of risk. If you would invest  3,688  in Guangzhou Fangbang Electronics on September 28, 2024 and sell it today you would earn a total of  108.00  from holding Guangzhou Fangbang Electronics or generate 2.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Guangzhou Fangbang Electronics  vs.  GalaxyCore

Guangzhou Fangbang

Risk-Adjusted Performance

3 of 100

Insignificant

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

GalaxyCore

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GalaxyCore are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GalaxyCore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guangzhou Fangbang and GalaxyCore

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

The idea behind Guangzhou Fangbang Electronics and GalaxyCore 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.