Correlation Between Guotai Epoint and Eastroc Beverage

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

Diversification Opportunities for Guotai Epoint and Eastroc Beverage

-0.43

Correlation Coefficient

Guotai Epoint  Eastroc Beverage

Very good diversification

The 3 months correlation between Guotai and Eastroc is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and Eastroc Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastroc Beverage 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 Eastroc Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastroc Beverage has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and Eastroc Beverage go up and down completely randomly.

Pair Corralation between Guotai Epoint and Eastroc Beverage

Assuming the 90 days trading horizon Guotai Epoint Software is expected to under-perform the Eastroc Beverage. But the stock apears to be less risky and, when comparing its historical volatility, Guotai Epoint Software is 1.17 times less risky than Eastroc Beverage. The stock trades about -0.46 of its potential returns per unit of risk. The Eastroc Beverage Group is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  22,118  in Eastroc Beverage Group on October 10, 2024 and sell it today you would earn a total of  3,750  from holding Eastroc Beverage Group or generate 16.95% 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.  Eastroc Beverage Group

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.

Eastroc Beverage

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eastroc Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guotai Epoint and Eastroc Beverage

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

The idea behind Guotai Epoint Software and Eastroc Beverage Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.