Correlation Between GD Culture and IGG

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

By analyzing existing cross correlation between GD Culture Group and IGG Inc, you can compare the effects of market volatilities on GD Culture and IGG 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 GD Culture with a short position of IGG. Check out your portfolio center. Please also check ongoing floating volatility patterns of GD Culture and IGG.

Diversification Opportunities for GD Culture and IGG

-0.87

Correlation Coefficient

GD Culture  IGG

Pay attention - limited upside

The 3 months correlation between GDC and IGG is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding GD Culture Group and IGG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGG Inc and GD Culture 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 GD Culture Group are associated (or correlated) with IGG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGG Inc has no effect on the direction of GD Culture i.e., GD Culture and IGG go up and down completely randomly.

Pair Corralation between GD Culture and IGG

Considering the 90-day investment horizon GD Culture Group is expected to generate 3.64 times more return on investment than IGG. However, GD Culture is 3.64 times more volatile than IGG Inc. It trades about 0.05 of its potential returns per unit of risk. IGG Inc is currently generating about 0.07 per unit of risk. If you would invest  273.00  in GD Culture Group on September 4, 2024 and sell it today you would lose (50.00) from holding GD Culture Group or give up 18.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

GD Culture Group  vs.  IGG Inc

GD Culture Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GD Culture Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

IGG Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IGG Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, IGG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GD Culture and IGG

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

The idea behind GD Culture Group and IGG Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.