Correlation Between Poly Real and Guangdong Wens

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

By analyzing existing cross correlation between Poly Real Estate and Guangdong Wens Foodstuff, you can compare the effects of market volatilities on Poly Real and Guangdong Wens 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 Poly Real with a short position of Guangdong Wens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poly Real and Guangdong Wens.

Diversification Opportunities for Poly Real and Guangdong Wens

0.86

Correlation Coefficient

Poly Real  Guangdong Wens

Very poor diversification

The 3 months correlation between Poly and Guangdong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Poly Real Estate and Guangdong Wens Foodstuff in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Wens Foodstuff and Poly Real 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 Poly Real Estate are associated (or correlated) with Guangdong Wens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Wens Foodstuff has no effect on the direction of Poly Real i.e., Poly Real and Guangdong Wens go up and down completely randomly.

Pair Corralation between Poly Real and Guangdong Wens

Assuming the 90 days trading horizon Poly Real Estate is expected to generate 1.06 times more return on investment than Guangdong Wens. However, Poly Real is 1.06 times more volatile than Guangdong Wens Foodstuff. It trades about 0.16 of its potential returns per unit of risk. Guangdong Wens Foodstuff is currently generating about 0.04 per unit of risk. If you would invest  779.00  in Poly Real Estate on September 5, 2024 and sell it today you would earn a total of  252.00  from holding Poly Real Estate or generate 32.35% return on investment over 90 days.

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

Poly Real Estate  vs.  Guangdong Wens Foodstuff

Poly Real Estate

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Poly Real Estate are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Poly Real sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Wens Foodstuff

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Wens Foodstuff are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Wens may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Poly Real and Guangdong Wens

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

The idea behind Poly Real Estate and Guangdong Wens Foodstuff 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.