Correlation Between Guangdong Cellwise and Allied Machinery

Can any of the company-specific risk be diversified away by investing in both Guangdong Cellwise and Allied Machinery 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 Allied Machinery 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 Allied Machinery Co, you can compare the effects of market volatilities on Guangdong Cellwise and Allied Machinery 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 Allied Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Cellwise and Allied Machinery.

Diversification Opportunities for Guangdong Cellwise and Allied Machinery

0.0

Correlation Coefficient

Guangdong Cellwise  Allied Machinery

Pay attention - limited upside

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

Pair Corralation between Guangdong Cellwise and Allied Machinery

Assuming the 90 days trading horizon Guangdong Cellwise is expected to generate 3.84 times less return on investment than Allied Machinery. In addition to that, Guangdong Cellwise is 1.15 times more volatile than Allied Machinery Co. It trades about 0.03 of its total potential returns per unit of risk. Allied Machinery Co is currently generating about 0.15 per unit of volatility. If you would invest  1,425  in Allied Machinery Co on October 23, 2024 and sell it today you would earn a total of  513.00  from holding Allied Machinery Co or generate 36.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Guangdong Cellwise Microelectr  vs.  Allied Machinery Co

Guangdong Cellwise

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Cellwise Microelectronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Cellwise may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Allied Machinery

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Guangdong Cellwise and Allied Machinery

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

The idea behind Guangdong Cellwise Microelectronics and Allied Machinery Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.