Correlation Between Guinness Atkinson and Commonwealth Japan

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

By analyzing existing cross correlation between Guinness Atkinson Asia and Commonwealth Japan Fund, you can compare the effects of market volatilities on Guinness Atkinson and Commonwealth Japan 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 Guinness Atkinson with a short position of Commonwealth Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guinness Atkinson and Commonwealth Japan.

Diversification Opportunities for Guinness Atkinson and Commonwealth Japan

0.12

Correlation Coefficient

Guinness Atkinson  Commonwealth Japan

Average diversification

The 3 months correlation between Guinness and Commonwealth is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Guinness Atkinson Asia and Commonwealth Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Japan and Guinness Atkinson 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 Guinness Atkinson Asia are associated (or correlated) with Commonwealth Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Japan has no effect on the direction of Guinness Atkinson i.e., Guinness Atkinson and Commonwealth Japan go up and down completely randomly.

Pair Corralation between Guinness Atkinson and Commonwealth Japan

Assuming the 90 days horizon Guinness Atkinson Asia is expected to under-perform the Commonwealth Japan. In addition to that, Guinness Atkinson is 1.18 times more volatile than Commonwealth Japan Fund. It trades about -0.05 of its total potential returns per unit of risk. Commonwealth Japan Fund is currently generating about 0.17 per unit of volatility. If you would invest  374.00  in Commonwealth Japan Fund on September 2, 2024 and sell it today you would earn a total of  14.00  from holding Commonwealth Japan Fund or generate 3.74% return on investment over 90 days.

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

Guinness Atkinson Asia  vs.  Commonwealth Japan Fund

Guinness Atkinson Asia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guinness Atkinson Asia are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Guinness Atkinson is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Commonwealth Japan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commonwealth Japan Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Commonwealth Japan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guinness Atkinson and Commonwealth Japan

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

The idea behind Guinness Atkinson Asia and Commonwealth Japan Fund 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.