Correlation Between Guotai Epoint and China Mobile

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

Diversification Opportunities for Guotai Epoint and China Mobile

-0.72

Correlation Coefficient

Guotai Epoint  China Mobile

Pay attention - limited upside

The 3 months correlation between Guotai and China is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and China Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile Limited 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 China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile Limited has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and China Mobile go up and down completely randomly.

Pair Corralation between Guotai Epoint and China Mobile

Assuming the 90 days trading horizon Guotai Epoint Software is expected to under-perform the China Mobile. In addition to that, Guotai Epoint is 2.01 times more volatile than China Mobile Limited. It trades about -0.03 of its total potential returns per unit of risk. China Mobile Limited is currently generating about 0.06 per unit of volatility. If you would invest  7,302  in China Mobile Limited on October 9, 2024 and sell it today you would earn a total of  3,813  from holding China Mobile Limited or generate 52.22% return on investment over 90 days.

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

Guotai Epoint Software  vs.  China Mobile Limited

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.

China Mobile Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Mobile Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Mobile 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 China Mobile

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

The idea behind Guotai Epoint Software and China Mobile Limited 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..