Correlation Between Glodon Software and Maoming Petro

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

By analyzing existing cross correlation between Glodon Software Co and Maoming Petro Chemical Shihua, you can compare the effects of market volatilities on Glodon Software and Maoming Petro 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 Glodon Software with a short position of Maoming Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glodon Software and Maoming Petro.

Diversification Opportunities for Glodon Software and Maoming Petro

0.43

Correlation Coefficient

Glodon Software  Maoming Petro

Very weak diversification

The 3 months correlation between Glodon and Maoming is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Glodon Software Co and Maoming Petro Chemical Shihua in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maoming Petro Chemical and Glodon 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 Glodon Software Co are associated (or correlated) with Maoming Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maoming Petro Chemical has no effect on the direction of Glodon Software i.e., Glodon Software and Maoming Petro go up and down completely randomly.

Pair Corralation between Glodon Software and Maoming Petro

Assuming the 90 days trading horizon Glodon Software Co is expected to generate 1.55 times more return on investment than Maoming Petro. However, Glodon Software is 1.55 times more volatile than Maoming Petro Chemical Shihua. It trades about 0.13 of its potential returns per unit of risk. Maoming Petro Chemical Shihua is currently generating about 0.19 per unit of risk. If you would invest  959.00  in Glodon Software Co on September 23, 2024 and sell it today you would earn a total of  314.00  from holding Glodon Software Co or generate 32.74% return on investment over 90 days.

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

Glodon Software Co  vs.  Maoming Petro Chemical Shihua

Glodon Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Glodon Software Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Glodon Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Maoming Petro Chemical

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maoming Petro Chemical Shihua are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maoming Petro sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glodon Software and Maoming Petro

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

The idea behind Glodon Software Co and Maoming Petro Chemical Shihua 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.