Correlation Between Ethereum and Guangdong Transtek

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

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

Diversification Opportunities for Ethereum and Guangdong Transtek

0.61

Correlation Coefficient

Ethereum  Guangdong Transtek

Poor diversification

The 3 months correlation between Ethereum and Guangdong is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Guangdong Transtek Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Transtek and Ethereum 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 Ethereum 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 Ethereum i.e., Ethereum and Guangdong Transtek go up and down completely randomly.

Pair Corralation between Ethereum and Guangdong Transtek

Assuming the 90 days trading horizon Ethereum is expected to under-perform the Guangdong Transtek. But the crypto coin apears to be less risky and, when comparing its historical volatility, Ethereum is 1.77 times less risky than Guangdong Transtek. The crypto coin trades about -0.16 of its potential returns per unit of risk. The Guangdong Transtek Medical is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,443  in Guangdong Transtek Medical on October 11, 2024 and sell it today you would lose (205.00) from holding Guangdong Transtek Medical or give up 14.21% of portfolio value over 90 days.

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

Ethereum  vs.  Guangdong Transtek Medical

Ethereum

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Transtek

Risk-Adjusted Performance

1 of 100

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 weak basic indicators, Guangdong Transtek may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ethereum and Guangdong Transtek

The main advantage of trading using opposite Ethereum and Guangdong Transtek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum 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 Ethereum 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.