Correlation Between SoFi Technologies and Guangzhou

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

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

Diversification Opportunities for SoFi Technologies and Guangzhou

0.84

Correlation Coefficient

SoFi Technologies  Guangzhou

Very poor diversification

The 3 months correlation between SoFi and Guangzhou is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Guangzhou RF Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou RF Properties and SoFi Technologies 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 SoFi Technologies are associated (or correlated) with Guangzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou RF Properties has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Guangzhou go up and down completely randomly.

Pair Corralation between SoFi Technologies and Guangzhou

Given the investment horizon of 90 days SoFi Technologies is expected to generate 0.55 times more return on investment than Guangzhou. However, SoFi Technologies is 1.81 times less risky than Guangzhou. It trades about 0.08 of its potential returns per unit of risk. Guangzhou RF Properties is currently generating about 0.04 per unit of risk. If you would invest  450.00  in SoFi Technologies on September 21, 2024 and sell it today you would earn a total of  1,053  from holding SoFi Technologies or generate 234.0% return on investment over 90 days.

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

SoFi Technologies  vs.  Guangzhou RF Properties

SoFi Technologies

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Technologies are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical and fundamental indicators, SoFi Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with SoFi Technologies and Guangzhou

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

The idea behind SoFi Technologies and Guangzhou RF Properties 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.