Correlation Between Guizhou BroadcastingTV and Sichuan Teway

Can any of the company-specific risk be diversified away by investing in both Guizhou BroadcastingTV and Sichuan Teway 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 Guizhou BroadcastingTV and Sichuan Teway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guizhou BroadcastingTV Info and Sichuan Teway Food, you can compare the effects of market volatilities on Guizhou BroadcastingTV and Sichuan Teway 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 Guizhou BroadcastingTV with a short position of Sichuan Teway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guizhou BroadcastingTV and Sichuan Teway.

Diversification Opportunities for Guizhou BroadcastingTV and Sichuan Teway

0.92

Correlation Coefficient

Guizhou BroadcastingTV  Sichuan Teway

Almost no diversification

The 3 months correlation between Guizhou and Sichuan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Guizhou BroadcastingTV Info and Sichuan Teway Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Teway Food and Guizhou BroadcastingTV 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 Guizhou BroadcastingTV Info are associated (or correlated) with Sichuan Teway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Teway Food has no effect on the direction of Guizhou BroadcastingTV i.e., Guizhou BroadcastingTV and Sichuan Teway go up and down completely randomly.

Pair Corralation between Guizhou BroadcastingTV and Sichuan Teway

Assuming the 90 days trading horizon Guizhou BroadcastingTV Info is expected to under-perform the Sichuan Teway. In addition to that, Guizhou BroadcastingTV is 1.3 times more volatile than Sichuan Teway Food. It trades about -0.02 of its total potential returns per unit of risk. Sichuan Teway Food is currently generating about -0.02 per unit of volatility. If you would invest  1,831  in Sichuan Teway Food on September 26, 2024 and sell it today you would lose (465.00) from holding Sichuan Teway Food or give up 25.4% of portfolio value over 90 days.

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

Guizhou BroadcastingTV Info  vs.  Sichuan Teway Food

Guizhou BroadcastingTV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guizhou BroadcastingTV Info are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guizhou BroadcastingTV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sichuan Teway Food

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Teway Food are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sichuan Teway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guizhou BroadcastingTV and Sichuan Teway

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

The idea behind Guizhou BroadcastingTV Info and Sichuan Teway Food 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.