Correlation Between Identiv and GuocoLand

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

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

Diversification Opportunities for Identiv and GuocoLand

0.81

Correlation Coefficient

Identiv  GuocoLand

Very poor diversification

The 3 months correlation between Identiv and GuocoLand is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and GuocoLand Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GuocoLand Limited and Identiv 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 Identiv are associated (or correlated) with GuocoLand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GuocoLand Limited has no effect on the direction of Identiv i.e., Identiv and GuocoLand go up and down completely randomly.

Pair Corralation between Identiv and GuocoLand

Assuming the 90 days trading horizon Identiv is expected to generate 3.91 times more return on investment than GuocoLand. However, Identiv is 3.91 times more volatile than GuocoLand Limited. It trades about 0.12 of its potential returns per unit of risk. GuocoLand Limited is currently generating about 0.2 per unit of risk. If you would invest  297.00  in Identiv on September 3, 2024 and sell it today you would earn a total of  63.00  from holding Identiv or generate 21.21% return on investment over 90 days.

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

Identiv  vs.  GuocoLand Limited

Identiv

Risk-Adjusted Performance

9 of 100

OK

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

GuocoLand Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GuocoLand Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GuocoLand may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Identiv and GuocoLand

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

The idea behind Identiv and GuocoLand Limited 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.