Correlation Between Guotai Epoint and Gan Yuan

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

Diversification Opportunities for Guotai Epoint and Gan Yuan

-0.81

Correlation Coefficient

Guotai Epoint  Gan Yuan

Pay attention - limited upside

The 3 months correlation between Guotai and Gan is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and Gan Yuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Yuan Foods 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 Gan Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Yuan Foods has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and Gan Yuan go up and down completely randomly.

Pair Corralation between Guotai Epoint and Gan Yuan

Assuming the 90 days trading horizon Guotai Epoint Software is expected to under-perform the Gan Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Guotai Epoint Software is 1.18 times less risky than Gan Yuan. The stock trades about -0.12 of its potential returns per unit of risk. The Gan Yuan Foods is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  8,545  in Gan Yuan Foods on October 22, 2024 and sell it today you would earn a total of  655.00  from holding Gan Yuan Foods or generate 7.67% return on investment over 90 days.

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

Guotai Epoint Software  vs.  Gan Yuan Foods

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 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.

Gan Yuan Foods

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gan Yuan Foods are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gan Yuan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guotai Epoint and Gan Yuan

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

The idea behind Guotai Epoint Software and Gan Yuan Foods 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.