Correlation Between Guangdong Investment and Vectrus

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

Diversification Opportunities for Guangdong Investment and Vectrus

0.0

Correlation Coefficient

Guangdong Investment  Vectrus

Pay attention - limited upside

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

Pair Corralation between Guangdong Investment and Vectrus

If you would invest  65.00  in Guangdong Investment Limited on October 8, 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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Guangdong Investment Limited  vs.  Vectrus

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.

Vectrus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vectrus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Vectrus is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Guangdong Investment and Vectrus

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

The idea behind Guangdong Investment Limited and Vectrus 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.