Correlation Between GANGLONG CHINA and DEUTSCHE WOHNEN

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

By analyzing existing cross correlation between GANGLONG CHINA PRGRLTD and DEUTSCHE WOHNEN ADRS12, you can compare the effects of market volatilities on GANGLONG CHINA and DEUTSCHE WOHNEN 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 GANGLONG CHINA with a short position of DEUTSCHE WOHNEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of GANGLONG CHINA and DEUTSCHE WOHNEN.

Diversification Opportunities for GANGLONG CHINA and DEUTSCHE WOHNEN

0.16

Correlation Coefficient

GANGLONG CHINA  DEUTSCHE WOHNEN

Average diversification

The 3 months correlation between GANGLONG and DEUTSCHE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GANGLONG CHINA PRGRLTD and DEUTSCHE WOHNEN ADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE WOHNEN ADRS12 and GANGLONG CHINA 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 GANGLONG CHINA PRGRLTD are associated (or correlated) with DEUTSCHE WOHNEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE WOHNEN ADRS12 has no effect on the direction of GANGLONG CHINA i.e., GANGLONG CHINA and DEUTSCHE WOHNEN go up and down completely randomly.

Pair Corralation between GANGLONG CHINA and DEUTSCHE WOHNEN

Assuming the 90 days horizon GANGLONG CHINA PRGRLTD is expected to generate 15.45 times more return on investment than DEUTSCHE WOHNEN. However, GANGLONG CHINA is 15.45 times more volatile than DEUTSCHE WOHNEN ADRS12. It trades about 0.13 of its potential returns per unit of risk. DEUTSCHE WOHNEN ADRS12 is currently generating about -0.08 per unit of risk. If you would invest  0.80  in GANGLONG CHINA PRGRLTD on September 23, 2024 and sell it today you would earn a total of  0.10  from holding GANGLONG CHINA PRGRLTD or generate 12.5% return on investment over 90 days.

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

GANGLONG CHINA PRGRLTD  vs.  DEUTSCHE WOHNEN ADRS12

GANGLONG CHINA PRGRLTD

Risk-Adjusted Performance

10 of 100

OK

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

DEUTSCHE WOHNEN ADRS12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEUTSCHE WOHNEN ADRS12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GANGLONG CHINA and DEUTSCHE WOHNEN

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

The idea behind GANGLONG CHINA PRGRLTD and DEUTSCHE WOHNEN ADRS12 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.