Correlation Between Glodon Software and Zhangjiagang Elegant

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Can any of the company-specific risk be diversified away by investing in both Glodon Software and Zhangjiagang Elegant 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 Zhangjiagang Elegant 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 Zhangjiagang Elegant Home, you can compare the effects of market volatilities on Glodon Software and Zhangjiagang Elegant 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 Zhangjiagang Elegant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glodon Software and Zhangjiagang Elegant.

Diversification Opportunities for Glodon Software and Zhangjiagang Elegant

GlodonZhangjiagangDiversified AwayGlodonZhangjiagangDiversified Away100%
0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Glodon and Zhangjiagang is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Glodon Software Co and Zhangjiagang Elegant Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhangjiagang Elegant Home 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 Zhangjiagang Elegant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhangjiagang Elegant Home has no effect on the direction of Glodon Software i.e., Glodon Software and Zhangjiagang Elegant go up and down completely randomly.

Pair Corralation between Glodon Software and Zhangjiagang Elegant

Assuming the 90 days trading horizon Glodon Software Co is expected to generate 1.38 times more return on investment than Zhangjiagang Elegant. However, Glodon Software is 1.38 times more volatile than Zhangjiagang Elegant Home. It trades about 0.13 of its potential returns per unit of risk. Zhangjiagang Elegant Home is currently generating about 0.13 per unit of risk. If you would invest  959.00  in Glodon Software Co on September 21, 2024 and sell it today you would earn a total of  313.00  from holding Glodon Software Co or generate 32.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Glodon Software Co  vs.  Zhangjiagang Elegant Home

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0102030405060
JavaScript chart by amCharts 3.21.15002410 603221
       Timeline  
Glodon Software 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec910111213141516
Zhangjiagang Elegant Home 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Zhangjiagang Elegant Home are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhangjiagang Elegant sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec88.599.51010.51111.512

Glodon Software and Zhangjiagang Elegant Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.04-9.76-6.49-3.220.03.376.8610.3513.8417.33 0.0100.0150.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15002410 603221
       Returns  

Pair Trading with Glodon Software and Zhangjiagang Elegant

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

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