Correlation Between Guandao Puer and Eramet SA

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

By analyzing existing cross correlation between Guandao Puer Investment and Eramet SA, you can compare the effects of market volatilities on Guandao Puer and Eramet SA 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 Guandao Puer with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guandao Puer and Eramet SA.

Diversification Opportunities for Guandao Puer and Eramet SA

0.0

Correlation Coefficient

Guandao Puer  Eramet SA

Pay attention - limited upside

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

Pair Corralation between Guandao Puer and Eramet SA

If you would invest  45.00  in Guandao Puer Investment on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Guandao Puer Investment or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.63%
Values	Daily Returns

Guandao Puer Investment  vs.  Eramet SA

Guandao Puer Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guandao Puer Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Guandao Puer is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Eramet SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eramet SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Guandao Puer and Eramet SA

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

The idea behind Guandao Puer Investment and Eramet SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.