Correlation Between China Galaxy and Woodbrook Group

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

By analyzing existing cross correlation between China Galaxy Securities and Woodbrook Group Holdings, you can compare the effects of market volatilities on China Galaxy and Woodbrook Group 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 China Galaxy with a short position of Woodbrook Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Galaxy and Woodbrook Group.

Diversification Opportunities for China Galaxy and Woodbrook Group

-0.36

Correlation Coefficient

China Galaxy  Woodbrook Group

Very good diversification

The 3 months correlation between China and Woodbrook is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding China Galaxy Securities and Woodbrook Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodbrook Group Holdings and China Galaxy 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 China Galaxy Securities are associated (or correlated) with Woodbrook Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodbrook Group Holdings has no effect on the direction of China Galaxy i.e., China Galaxy and Woodbrook Group go up and down completely randomly.

Pair Corralation between China Galaxy and Woodbrook Group

If you would invest  6.10  in Woodbrook Group Holdings on September 3, 2024 and sell it today you would lose (0.98) from holding Woodbrook Group Holdings or give up 16.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

China Galaxy Securities  vs.  Woodbrook Group Holdings

China Galaxy Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Galaxy Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, China Galaxy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Woodbrook Group Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Woodbrook Group Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Woodbrook Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Galaxy and Woodbrook Group

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

The idea behind China Galaxy Securities and Woodbrook Group Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.