Correlation Between Guangdong Cellwise and Cloud Live

Can any of the company-specific risk be diversified away by investing in both Guangdong Cellwise and Cloud Live 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 Guangdong Cellwise and Cloud Live into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangdong Cellwise Microelectronics and Cloud Live Technology, you can compare the effects of market volatilities on Guangdong Cellwise and Cloud Live 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 Guangdong Cellwise with a short position of Cloud Live. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Cellwise and Cloud Live.

Diversification Opportunities for Guangdong Cellwise and Cloud Live

0.34

Correlation Coefficient

Guangdong Cellwise  Cloud Live

Weak diversification

The 3 months correlation between Guangdong and Cloud is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Cellwise Microelectr and Cloud Live Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Live Technology and Guangdong Cellwise 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 Guangdong Cellwise Microelectronics are associated (or correlated) with Cloud Live. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Live Technology has no effect on the direction of Guangdong Cellwise i.e., Guangdong Cellwise and Cloud Live go up and down completely randomly.

Pair Corralation between Guangdong Cellwise and Cloud Live

Assuming the 90 days trading horizon Guangdong Cellwise Microelectronics is expected to generate 0.94 times more return on investment than Cloud Live. However, Guangdong Cellwise Microelectronics is 1.06 times less risky than Cloud Live. It trades about 0.05 of its potential returns per unit of risk. Cloud Live Technology is currently generating about -0.06 per unit of risk. If you would invest  4,673  in Guangdong Cellwise Microelectronics on October 25, 2024 and sell it today you would earn a total of  436.00  from holding Guangdong Cellwise Microelectronics or generate 9.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Guangdong Cellwise Microelectr  vs.  Cloud Live Technology

Guangdong Cellwise

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Cellwise Microelectronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Cellwise sustained solid returns over the last few months and may actually be approaching a breakup point.

Cloud Live Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cloud Live Technology 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.

Pair Trading with Guangdong Cellwise and Cloud Live

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

The idea behind Guangdong Cellwise Microelectronics and Cloud Live 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.