Correlation Between ROPEOK Technology and Guangdong Taienkang

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

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

Diversification Opportunities for ROPEOK Technology and Guangdong Taienkang

0.64

Correlation Coefficient

ROPEOK Technology  Guangdong Taienkang

Poor diversification

The 3 months correlation between ROPEOK and Guangdong is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ROPEOK Technology Group and Guangdong Taienkang Pharmaceut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Taienkang and ROPEOK Technology 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 ROPEOK Technology Group are associated (or correlated) with Guangdong Taienkang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Taienkang has no effect on the direction of ROPEOK Technology i.e., ROPEOK Technology and Guangdong Taienkang go up and down completely randomly.

Pair Corralation between ROPEOK Technology and Guangdong Taienkang

Assuming the 90 days trading horizon ROPEOK Technology is expected to generate 22.08 times less return on investment than Guangdong Taienkang. In addition to that, ROPEOK Technology is 1.28 times more volatile than Guangdong Taienkang Pharmaceutical. It trades about 0.01 of its total potential returns per unit of risk. Guangdong Taienkang Pharmaceutical is currently generating about 0.21 per unit of volatility. If you would invest  1,501  in Guangdong Taienkang Pharmaceutical on December 26, 2024 and sell it today you would earn a total of  458.00  from holding Guangdong Taienkang Pharmaceutical or generate 30.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

ROPEOK Technology Group  vs.  Guangdong Taienkang Pharmaceut

ROPEOK Technology

Risk-Adjusted Performance

Very Weak

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

Guangdong Taienkang

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Taienkang Pharmaceutical are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Taienkang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ROPEOK Technology and Guangdong Taienkang

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

The idea behind ROPEOK Technology Group and Guangdong Taienkang Pharmaceutical 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.