Correlation Between Guotai Epoint and Thunder Software

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

Diversification Opportunities for Guotai Epoint and Thunder Software

0.19

Correlation Coefficient

Guotai Epoint  Thunder Software

Average diversification

The 3 months correlation between Guotai and Thunder is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and Thunder Software Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Software Tec 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 Thunder Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Software Tec has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and Thunder Software go up and down completely randomly.

Pair Corralation between Guotai Epoint and Thunder Software

Assuming the 90 days trading horizon Guotai Epoint Software is expected to under-perform the Thunder Software. But the stock apears to be less risky and, when comparing its historical volatility, Guotai Epoint Software is 1.02 times less risky than Thunder Software. The stock trades about -0.03 of its potential returns per unit of risk. The Thunder Software Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  10,474  in Thunder Software Technology on October 10, 2024 and sell it today you would lose (5,202) from holding Thunder Software Technology or give up 49.67% of portfolio value over 90 days.

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

Guotai Epoint Software  vs.  Thunder Software Technology

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.

Thunder Software Tec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Guotai Epoint and Thunder Software

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

The idea behind Guotai Epoint Software and Thunder Software Technology 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.