Correlation Between ASURE SOFTWARE and Guangdong Investment

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

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

Diversification Opportunities for ASURE SOFTWARE and Guangdong Investment

0.51

Correlation Coefficient

ASURE SOFTWARE  Guangdong Investment

Very weak diversification

The 3 months correlation between ASURE and Guangdong is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ASURE SOFTWARE and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and ASURE SOFTWARE 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 ASURE SOFTWARE are associated (or correlated) with Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of ASURE SOFTWARE i.e., ASURE SOFTWARE and Guangdong Investment go up and down completely randomly.

Pair Corralation between ASURE SOFTWARE and Guangdong Investment

Assuming the 90 days trading horizon ASURE SOFTWARE is expected to generate 1.06 times more return on investment than Guangdong Investment. However, ASURE SOFTWARE is 1.06 times more volatile than Guangdong Investment Limited. It trades about 0.16 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about 0.14 per unit of risk. If you would invest  875.00  in ASURE SOFTWARE on October 25, 2024 and sell it today you would earn a total of  305.00  from holding ASURE SOFTWARE or generate 34.86% return on investment over 90 days.

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

ASURE SOFTWARE  vs.  Guangdong Investment Limited

ASURE SOFTWARE

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASURE SOFTWARE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ASURE SOFTWARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Investment Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Guangdong Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASURE SOFTWARE and Guangdong Investment

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

The idea behind ASURE SOFTWARE and Guangdong Investment Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.