Correlation Between Guotai Epoint and Shenzhen Noposion

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

Diversification Opportunities for Guotai Epoint and Shenzhen Noposion

-0.59

Correlation Coefficient

Guotai Epoint  Shenzhen Noposion

Excellent diversification

The 3 months correlation between Guotai and Shenzhen is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and Shenzhen Noposion Agrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Noposion 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 Shenzhen Noposion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Noposion has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and Shenzhen Noposion go up and down completely randomly.

Pair Corralation between Guotai Epoint and Shenzhen Noposion

Assuming the 90 days trading horizon Guotai Epoint Software is expected to under-perform the Shenzhen Noposion. In addition to that, Guotai Epoint is 1.37 times more volatile than Shenzhen Noposion Agrochemicals. It trades about -0.03 of its total potential returns per unit of risk. Shenzhen Noposion Agrochemicals is currently generating about 0.07 per unit of volatility. If you would invest  535.00  in Shenzhen Noposion Agrochemicals on October 10, 2024 and sell it today you would earn a total of  498.00  from holding Shenzhen Noposion Agrochemicals or generate 93.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Guotai Epoint Software  vs.  Shenzhen Noposion Agrochemical

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.

Shenzhen Noposion

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Noposion Agrochemicals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Noposion sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guotai Epoint and Shenzhen Noposion

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

The idea behind Guotai Epoint Software and Shenzhen Noposion Agrochemicals 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.