Correlation Between GE Vernova and China Gas

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

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

Diversification Opportunities for GE Vernova and China Gas

-0.6

Correlation Coefficient

GE Vernova  China Gas

Excellent diversification

The 3 months correlation between GEV and China is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and China Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Gas Holdings and GE Vernova 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 GE Vernova LLC are associated (or correlated) with China Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gas Holdings has no effect on the direction of GE Vernova i.e., GE Vernova and China Gas go up and down completely randomly.

Pair Corralation between GE Vernova and China Gas

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 1.1 times more return on investment than China Gas. However, GE Vernova is 1.1 times more volatile than China Gas Holdings. It trades about 0.31 of its potential returns per unit of risk. China Gas Holdings is currently generating about 0.02 per unit of risk. If you would invest  32,873  in GE Vernova LLC on October 26, 2024 and sell it today you would earn a total of  10,898  from holding GE Vernova LLC or generate 33.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

GE Vernova LLC  vs.  China Gas Holdings

GE Vernova LLC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

China Gas Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Gas Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GE Vernova and China Gas

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

The idea behind GE Vernova LLC and China Gas 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.