Correlation Between Guobo Electronics and Thunder Software

Can any of the company-specific risk be diversified away by investing in both Guobo Electronics and Thunder Software 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 Guobo Electronics and Thunder Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guobo Electronics Co and Thunder Software Technology, you can compare the effects of market volatilities on Guobo Electronics and Thunder Software 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 Guobo Electronics with a short position of Thunder Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guobo Electronics and Thunder Software.

Diversification Opportunities for Guobo Electronics and Thunder Software

0.11

Correlation Coefficient

Guobo Electronics  Thunder Software

Average diversification

The 3 months correlation between Guobo and Thunder is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Guobo Electronics Co and Thunder Software Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Software Tec and Guobo Electronics 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 Guobo Electronics Co are associated (or correlated) with Thunder Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Software Tec has no effect on the direction of Guobo Electronics i.e., Guobo Electronics and Thunder Software go up and down completely randomly.

Pair Corralation between Guobo Electronics and Thunder Software

Assuming the 90 days trading horizon Guobo Electronics Co is expected to generate 0.77 times more return on investment than Thunder Software. However, Guobo Electronics Co is 1.29 times less risky than Thunder Software. It trades about -0.01 of its potential returns per unit of risk. Thunder Software Technology is currently generating about -0.02 per unit of risk. If you would invest  6,567  in Guobo Electronics Co on October 10, 2024 and sell it today you would lose (2,004) from holding Guobo Electronics Co or give up 30.52% of portfolio value over 90 days.

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

Guobo Electronics Co  vs.  Thunder Software Technology

Guobo Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guobo Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guobo Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thunder Software Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thunder Software Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Thunder Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guobo Electronics and Thunder Software

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

The idea behind Guobo Electronics Co and Thunder Software 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.