Correlation Between Guangdong Investment and Rambler Metals

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

Diversification Opportunities for Guangdong Investment and Rambler Metals

0.0

Correlation Coefficient

Guangdong Investment  Rambler Metals

Pay attention - limited upside

The 3 months correlation between Guangdong and Rambler is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Rambler Metals and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rambler Metals 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 Rambler Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rambler Metals has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Rambler Metals go up and down completely randomly.

Pair Corralation between Guangdong Investment and Rambler Metals

If you would invest  6.89  in Rambler Metals and on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Rambler Metals and or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Guangdong Investment Limited  vs.  Rambler Metals and

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.

Rambler Metals

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Guangdong Investment and Rambler Metals

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

The idea behind Guangdong Investment Limited and Rambler Metals and 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.