Correlation Between Guangdong Investment and Investment

Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Investment 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 Investment 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 Investment AB Latour, you can compare the effects of market volatilities on Guangdong Investment and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Investment.

Diversification Opportunities for Guangdong Investment and Investment

-0.28

Correlation Coefficient

Guangdong Investment  Investment

Very good diversification

The 3 months correlation between Guangdong and Investment is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Investment AB Latour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Latour 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Latour has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Investment go up and down completely randomly.

Pair Corralation between Guangdong Investment and Investment

Assuming the 90 days horizon Guangdong Investment Limited is expected to under-perform the Investment. But the pink sheet apears to be less risky and, when comparing its historical volatility, Guangdong Investment Limited is 1.13 times less risky than Investment. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Investment AB Latour is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,456  in Investment AB Latour on December 24, 2024 and sell it today you would earn a total of  213.00  from holding Investment AB Latour or generate 8.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Guangdong Investment Limited  vs.  Investment AB Latour

Guangdong Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangdong Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Guangdong Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Investment AB Latour

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Investment AB Latour are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Guangdong Investment and Investment

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

The idea behind Guangdong Investment Limited and Investment AB Latour 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 Global Correlations module to find global opportunities by holding instruments from different markets.