Correlation Between Guotai Epoint and Nanjing Vishee

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

Diversification Opportunities for Guotai Epoint and Nanjing Vishee

0.14

Correlation Coefficient

Guotai Epoint  Nanjing Vishee

Average diversification

The 3 months correlation between Guotai and Nanjing is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and Nanjing Vishee Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Vishee Medical 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 Nanjing Vishee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Vishee Medical has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and Nanjing Vishee go up and down completely randomly.

Pair Corralation between Guotai Epoint and Nanjing Vishee

Assuming the 90 days trading horizon Guotai Epoint Software is expected to under-perform the Nanjing Vishee. In addition to that, Guotai Epoint is 1.4 times more volatile than Nanjing Vishee Medical. It trades about -0.07 of its total potential returns per unit of risk. Nanjing Vishee Medical is currently generating about -0.02 per unit of volatility. If you would invest  2,860  in Nanjing Vishee Medical on October 9, 2024 and sell it today you would lose (185.00) from holding Nanjing Vishee Medical or give up 6.47% 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.  Nanjing Vishee Medical

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.

Nanjing Vishee Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanjing Vishee Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nanjing Vishee 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 Nanjing Vishee

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

The idea behind Guotai Epoint Software and Nanjing Vishee Medical 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.