Correlation Between Armm and Guangdong Investment

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

By analyzing existing cross correlation between Armm Inc and Guangdong Investment Limited, you can compare the effects of market volatilities on Armm and Guangdong Investment 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 Armm with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armm and Guangdong Investment.

Diversification Opportunities for Armm and Guangdong Investment

0.0

Correlation Coefficient

Armm  Guangdong Investment

Pay attention - limited upside

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

Pair Corralation between Armm and Guangdong Investment

Given the investment horizon of 90 days Armm Inc is expected to generate 6.15 times more return on investment than Guangdong Investment. However, Armm is 6.15 times more volatile than Guangdong Investment Limited. It trades about 0.04 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about 0.03 per unit of risk. If you would invest  55.00  in Armm Inc on September 4, 2024 and sell it today you would lose (54.91) from holding Armm Inc or give up 99.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.18%
Values	Daily Returns

Armm Inc  vs.  Guangdong Investment Limited

Armm Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armm Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Armm is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Guangdong Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Investment Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Guangdong Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armm and Guangdong Investment

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

The idea behind Armm Inc and Guangdong Investment Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.