Correlation Between Guobo Electronics and Shanghai Broadband
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By analyzing existing cross correlation between Guobo Electronics Co and Shanghai Broadband Technology, you can compare the effects of market volatilities on Guobo Electronics and Shanghai Broadband 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 Shanghai Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guobo Electronics and Shanghai Broadband.
Diversification Opportunities for Guobo Electronics and Shanghai Broadband
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guobo and Shanghai is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Guobo Electronics Co and Shanghai Broadband Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Broadband 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 Shanghai Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Broadband has no effect on the direction of Guobo Electronics i.e., Guobo Electronics and Shanghai Broadband go up and down completely randomly.
Pair Corralation between Guobo Electronics and Shanghai Broadband
Assuming the 90 days trading horizon Guobo Electronics Co is expected to generate 1.87 times more return on investment than Shanghai Broadband. However, Guobo Electronics is 1.87 times more volatile than Shanghai Broadband Technology. It trades about 0.14 of its potential returns per unit of risk. Shanghai Broadband Technology is currently generating about 0.14 per unit of risk. If you would invest 3,359 in Guobo Electronics Co on September 20, 2024 and sell it today you would earn a total of 1,390 from holding Guobo Electronics Co or generate 41.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Guobo Electronics Co vs. Shanghai Broadband Technology
Performance |
Timeline |
Guobo Electronics |
Shanghai Broadband |
Guobo Electronics and Shanghai Broadband Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guobo Electronics and Shanghai Broadband
The main advantage of trading using opposite Guobo Electronics and Shanghai Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guobo Electronics position performs unexpectedly, Shanghai Broadband 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 Shanghai Broadband will offset losses from the drop in Shanghai Broadband's long position.The idea behind Guobo Electronics Co and Shanghai Broadband 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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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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