Correlation Between Guotai Epoint and Gohigh Data

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

By analyzing existing cross correlation between Guotai Epoint Software and Gohigh Data Networks, you can compare the effects of market volatilities on Guotai Epoint and Gohigh Data 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 Guotai Epoint with a short position of Gohigh Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guotai Epoint and Gohigh Data.

Diversification Opportunities for Guotai Epoint and Gohigh Data

0.01

Correlation Coefficient

Guotai Epoint  Gohigh Data

Significant diversification

The 3 months correlation between Guotai and Gohigh is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and Gohigh Data Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gohigh Data Networks and Guotai Epoint 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 Guotai Epoint Software are associated (or correlated) with Gohigh Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gohigh Data Networks has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and Gohigh Data go up and down completely randomly.

Pair Corralation between Guotai Epoint and Gohigh Data

Assuming the 90 days trading horizon Guotai Epoint Software is expected to under-perform the Gohigh Data. In addition to that, Guotai Epoint is 1.23 times more volatile than Gohigh Data Networks. It trades about -0.04 of its total potential returns per unit of risk. Gohigh Data Networks is currently generating about -0.05 per unit of volatility. If you would invest  315.00  in Gohigh Data Networks on October 11, 2024 and sell it today you would lose (39.00) from holding Gohigh Data Networks or give up 12.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Guotai Epoint Software  vs.  Gohigh Data Networks

Guotai Epoint Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guotai Epoint Software 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.

Gohigh Data Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gohigh Data Networks 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.

Pair Trading with Guotai Epoint and Gohigh Data

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

The idea behind Guotai Epoint Software and Gohigh Data Networks 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 Stocks Directory module to find actively traded stocks across global markets.