Correlation Between Guangdong Investment and Sprinklr

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

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

Diversification Opportunities for Guangdong Investment and Sprinklr

0.32

Correlation Coefficient

Guangdong Investment  Sprinklr

Weak diversification

The 3 months correlation between Guangdong and Sprinklr is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Sprinklr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprinklr and Guangdong Investment 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 Guangdong Investment Limited are associated (or correlated) with Sprinklr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprinklr has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Sprinklr go up and down completely randomly.

Pair Corralation between Guangdong Investment and Sprinklr

Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 2.4 times more return on investment than Sprinklr. However, Guangdong Investment is 2.4 times more volatile than Sprinklr. It trades about 0.11 of its potential returns per unit of risk. Sprinklr is currently generating about 0.15 per unit of risk. If you would invest  65.00  in Guangdong Investment Limited on October 7, 2024 and sell it today you would earn a total of  15.00  from holding Guangdong Investment Limited or generate 23.08% return on investment over 90 days.

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

Guangdong Investment Limited  vs.  Sprinklr

Guangdong Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Investment Limited are ranked lower than 4 (%) 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.

Sprinklr

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprinklr are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Sprinklr displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangdong Investment and Sprinklr

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

The idea behind Guangdong Investment Limited and Sprinklr 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.