Correlation Between Guangzhou and Meiwu Technology

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

Diversification Opportunities for Guangzhou and Meiwu Technology

0.35

Correlation Coefficient

Guangzhou  Meiwu Technology

Weak diversification

The 3 months correlation between Guangzhou and Meiwu is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou RF Properties and Meiwu Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiwu Technology 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 Meiwu Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiwu Technology has no effect on the direction of Guangzhou i.e., Guangzhou and Meiwu Technology go up and down completely randomly.

Pair Corralation between Guangzhou and Meiwu Technology

Assuming the 90 days horizon Guangzhou is expected to generate 1.13 times less return on investment than Meiwu Technology. But when comparing it to its historical volatility, Guangzhou RF Properties is 1.32 times less risky than Meiwu Technology. It trades about 0.04 of its potential returns per unit of risk. Meiwu Technology Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  303.00  in Meiwu Technology Co on September 21, 2024 and sell it today you would lose (122.00) from holding Meiwu Technology Co or give up 40.26% of portfolio value over 90 days.

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

Guangzhou RF Properties  vs.  Meiwu Technology Co

Guangzhou RF Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou RF Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, Guangzhou reported solid returns over the last few months and may actually be approaching a breakup point.

Meiwu Technology

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meiwu Technology Co are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Meiwu Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangzhou and Meiwu Technology

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

The idea behind Guangzhou RF Properties and Meiwu Technology Co 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.