Correlation Between Guild Holdings and CNFinance Holdings

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

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

Diversification Opportunities for Guild Holdings and CNFinance Holdings

-0.78

Correlation Coefficient

Guild Holdings  CNFinance Holdings

Pay attention - limited upside

The 3 months correlation between Guild and CNFinance is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Guild Holdings Co and CNFinance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNFinance Holdings and Guild Holdings 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 Guild Holdings Co are associated (or correlated) with CNFinance Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNFinance Holdings has no effect on the direction of Guild Holdings i.e., Guild Holdings and CNFinance Holdings go up and down completely randomly.

Pair Corralation between Guild Holdings and CNFinance Holdings

Given the investment horizon of 90 days Guild Holdings Co is expected to under-perform the CNFinance Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Guild Holdings Co is 2.5 times less risky than CNFinance Holdings. The stock trades about -0.05 of its potential returns per unit of risk. The CNFinance Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  95.00  in CNFinance Holdings on November 29, 2024 and sell it today you would earn a total of  16.00  from holding CNFinance Holdings or generate 16.84% return on investment over 90 days.

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

Guild Holdings Co  vs.  CNFinance Holdings

Guild Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guild Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CNFinance Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CNFinance Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, CNFinance Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guild Holdings and CNFinance Holdings

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

The idea behind Guild Holdings Co and CNFinance 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.