Correlation Between Binance Coin and Guangdong Transtek

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

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

Diversification Opportunities for Binance Coin and Guangdong Transtek

-0.27

Correlation Coefficient

Binance Coin  Guangdong Transtek

Very good diversification

The 3 months correlation between Binance and Guangdong is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Guangdong Transtek Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Transtek and Binance Coin 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 Binance Coin are associated (or correlated) with Guangdong Transtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Transtek has no effect on the direction of Binance Coin i.e., Binance Coin and Guangdong Transtek go up and down completely randomly.

Pair Corralation between Binance Coin and Guangdong Transtek

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the Guangdong Transtek. But the crypto coin apears to be less risky and, when comparing its historical volatility, Binance Coin is 1.03 times less risky than Guangdong Transtek. The crypto coin trades about -0.04 of its potential returns per unit of risk. The Guangdong Transtek Medical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,521  in Guangdong Transtek Medical on December 24, 2024 and sell it today you would earn a total of  18.00  from holding Guangdong Transtek Medical or generate 1.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

Binance Coin  vs.  Guangdong Transtek Medical

Binance Coin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Binance Coin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Binance Coin shareholders.

Guangdong Transtek

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Transtek Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Guangdong Transtek is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Binance Coin and Guangdong Transtek

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

The idea behind Binance Coin and Guangdong Transtek Medical 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.