Correlation Between Guangdong Investment and MOBILE FACTORY

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

Diversification Opportunities for Guangdong Investment and MOBILE FACTORY

-0.27

Correlation Coefficient

Guangdong Investment  MOBILE FACTORY

Very good diversification

The 3 months correlation between Guangdong and MOBILE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and MOBILE FACTORY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOBILE FACTORY INC 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 MOBILE FACTORY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOBILE FACTORY INC has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and MOBILE FACTORY go up and down completely randomly.

Pair Corralation between Guangdong Investment and MOBILE FACTORY

Assuming the 90 days horizon Guangdong Investment Limited is expected to under-perform the MOBILE FACTORY. In addition to that, Guangdong Investment is 1.81 times more volatile than MOBILE FACTORY INC. It trades about -0.02 of its total potential returns per unit of risk. MOBILE FACTORY INC is currently generating about 0.03 per unit of volatility. If you would invest  555.00  in MOBILE FACTORY INC on December 21, 2024 and sell it today you would earn a total of  10.00  from holding MOBILE FACTORY INC or generate 1.8% return on investment over 90 days.

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

Guangdong Investment Limited  vs.  MOBILE FACTORY INC

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.

MOBILE FACTORY INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOBILE FACTORY INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MOBILE FACTORY is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guangdong Investment and MOBILE FACTORY

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

The idea behind Guangdong Investment Limited and MOBILE FACTORY INC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.