Correlation Between Beijing Roborock and Guosheng Financial

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

By analyzing existing cross correlation between Beijing Roborock Technology and Guosheng Financial Holding, you can compare the effects of market volatilities on Beijing Roborock and Guosheng Financial 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 Beijing Roborock with a short position of Guosheng Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Roborock and Guosheng Financial.

Diversification Opportunities for Beijing Roborock and Guosheng Financial

-0.21

Correlation Coefficient

Beijing Roborock  Guosheng Financial

Very good diversification

The 3 months correlation between Beijing and Guosheng is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Roborock Technology and Guosheng Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guosheng Financial and Beijing Roborock 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 Beijing Roborock Technology are associated (or correlated) with Guosheng Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guosheng Financial has no effect on the direction of Beijing Roborock i.e., Beijing Roborock and Guosheng Financial go up and down completely randomly.

Pair Corralation between Beijing Roborock and Guosheng Financial

Assuming the 90 days trading horizon Beijing Roborock is expected to generate 3.66 times less return on investment than Guosheng Financial. In addition to that, Beijing Roborock is 1.02 times more volatile than Guosheng Financial Holding. It trades about 0.01 of its total potential returns per unit of risk. Guosheng Financial Holding is currently generating about 0.04 per unit of volatility. If you would invest  870.00  in Guosheng Financial Holding on October 5, 2024 and sell it today you would earn a total of  382.00  from holding Guosheng Financial Holding or generate 43.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.77%
Values	Daily Returns

Beijing Roborock Technology  vs.  Guosheng Financial Holding

Beijing Roborock Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Roborock Technology 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.

Guosheng Financial

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Guosheng Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guosheng Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Beijing Roborock and Guosheng Financial

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

The idea behind Beijing Roborock Technology and Guosheng Financial Holding 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 Anywhere module to track or share privately all of your investments from the convenience of any device.