Correlation Between Guangzhou and Custom Truck

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

By analyzing existing cross correlation between Guangzhou RF Properties and Custom Truck One, you can compare the effects of market volatilities on Guangzhou and Custom Truck 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 Guangzhou with a short position of Custom Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou and Custom Truck.

Diversification Opportunities for Guangzhou and Custom Truck

0.5

Correlation Coefficient

Guangzhou  Custom Truck

Very weak diversification

The 3 months correlation between Guangzhou and Custom is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou RF Properties and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One and Guangzhou 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 Guangzhou RF Properties are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of Guangzhou i.e., Guangzhou and Custom Truck go up and down completely randomly.

Pair Corralation between Guangzhou and Custom Truck

If you would invest  489.00  in Custom Truck One on October 26, 2024 and sell it today you would earn a total of  45.00  from holding Custom Truck One or generate 9.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Guangzhou RF Properties  vs.  Custom Truck One

Guangzhou RF Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

Custom Truck One

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Custom Truck unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangzhou and Custom Truck

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

The idea behind Guangzhou RF Properties and Custom Truck One 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.