Correlation Between GUOTAI JUNAN and Advanced Info

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

By analyzing existing cross correlation between GUOTAI JUNAN SEC and Advanced Info Service, you can compare the effects of market volatilities on GUOTAI JUNAN and Advanced Info 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 GUOTAI JUNAN with a short position of Advanced Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUOTAI JUNAN and Advanced Info.

Diversification Opportunities for GUOTAI JUNAN and Advanced Info

0.78

Correlation Coefficient

GUOTAI JUNAN  Advanced Info

Poor diversification

The 3 months correlation between GUOTAI and Advanced is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GUOTAI JUNAN SEC and Advanced Info Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Info Service and GUOTAI JUNAN 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 GUOTAI JUNAN SEC are associated (or correlated) with Advanced Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Info Service has no effect on the direction of GUOTAI JUNAN i.e., GUOTAI JUNAN and Advanced Info go up and down completely randomly.

Pair Corralation between GUOTAI JUNAN and Advanced Info

Assuming the 90 days trading horizon GUOTAI JUNAN SEC is expected to generate 2.75 times more return on investment than Advanced Info. However, GUOTAI JUNAN is 2.75 times more volatile than Advanced Info Service. It trades about 0.12 of its potential returns per unit of risk. Advanced Info Service is currently generating about 0.11 per unit of risk. If you would invest  95.00  in GUOTAI JUNAN SEC on September 15, 2024 and sell it today you would earn a total of  47.00  from holding GUOTAI JUNAN SEC or generate 49.47% return on investment over 90 days.

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

GUOTAI JUNAN SEC  vs.  Advanced Info Service

GUOTAI JUNAN SEC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GUOTAI JUNAN SEC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GUOTAI JUNAN reported solid returns over the last few months and may actually be approaching a breakup point.

Advanced Info Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Info Service are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Advanced Info reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GUOTAI JUNAN and Advanced Info

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

The idea behind GUOTAI JUNAN SEC and Advanced Info Service 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.