Correlation Between ROPEOK Technology and Guangdong Ellington

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

Diversification Opportunities for ROPEOK Technology and Guangdong Ellington

0.34

Correlation Coefficient

ROPEOK Technology  Guangdong Ellington

Weak diversification

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

Pair Corralation between ROPEOK Technology and Guangdong Ellington

Assuming the 90 days trading horizon ROPEOK Technology Group is expected to generate 1.17 times more return on investment than Guangdong Ellington. However, ROPEOK Technology is 1.17 times more volatile than Guangdong Ellington Electronics. It trades about -0.04 of its potential returns per unit of risk. Guangdong Ellington Electronics is currently generating about -0.05 per unit of risk. If you would invest  927.00  in ROPEOK Technology Group on October 8, 2024 and sell it today you would lose (110.00) from holding ROPEOK Technology Group or give up 11.87% of portfolio value over 90 days.

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

ROPEOK Technology Group  vs.  Guangdong Ellington Electronic

ROPEOK Technology

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Guangdong Ellington

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangdong Ellington Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ROPEOK Technology and Guangdong Ellington

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

The idea behind ROPEOK Technology Group and Guangdong Ellington Electronics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.