Correlation Between Guotai Epoint and Jiangsu Pacific

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

Diversification Opportunities for Guotai Epoint and Jiangsu Pacific

0.0

Correlation Coefficient

Guotai Epoint  Jiangsu Pacific

Pay attention - limited upside

The 3 months correlation between Guotai and Jiangsu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and Jiangsu Pacific Quartz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Pacific Quartz 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 Jiangsu Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Pacific Quartz has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and Jiangsu Pacific go up and down completely randomly.

Pair Corralation between Guotai Epoint and Jiangsu Pacific

Assuming the 90 days trading horizon Guotai Epoint is expected to generate 1.77 times less return on investment than Jiangsu Pacific. In addition to that, Guotai Epoint is 1.07 times more volatile than Jiangsu Pacific Quartz. It trades about 0.04 of its total potential returns per unit of risk. Jiangsu Pacific Quartz is currently generating about 0.08 per unit of volatility. If you would invest  3,055  in Jiangsu Pacific Quartz on December 26, 2024 and sell it today you would earn a total of  406.00  from holding Jiangsu Pacific Quartz or generate 13.29% return on investment over 90 days.

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

Guotai Epoint Software  vs.  Jiangsu Pacific Quartz

Guotai Epoint Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guotai Epoint Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guotai Epoint may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Jiangsu Pacific Quartz

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Pacific Quartz are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Pacific sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guotai Epoint and Jiangsu Pacific

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

The idea behind Guotai Epoint Software and Jiangsu Pacific Quartz 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.