Correlation Between GIB Capital and Hong Yuan

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

By analyzing existing cross correlation between GIB Capital Group and Hong Yuan Holding, you can compare the effects of market volatilities on GIB Capital and Hong Yuan 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 GIB Capital with a short position of Hong Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GIB Capital and Hong Yuan.

Diversification Opportunities for GIB Capital and Hong Yuan

0.0

Correlation Coefficient

GIB Capital  Hong Yuan

Pay attention - limited upside

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

Pair Corralation between GIB Capital and Hong Yuan

If you would invest  3.70  in Hong Yuan Holding on October 23, 2024 and sell it today you would earn a total of  1.28  from holding Hong Yuan Holding or generate 34.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

GIB Capital Group  vs.  Hong Yuan Holding

GIB Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GIB Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, GIB Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hong Yuan Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hong Yuan Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hong Yuan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GIB Capital and Hong Yuan

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

The idea behind GIB Capital Group and Hong Yuan Holding 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 Anywhere module to track or share privately all of your investments from the convenience of any device.