Correlation Between Guangdong Investment and Everspin Technologies

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

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

Diversification Opportunities for Guangdong Investment and Everspin Technologies

0.5

Correlation Coefficient

Guangdong Investment  Everspin Technologies

Very weak diversification

The 3 months correlation between Guangdong and Everspin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies and Guangdong Investment 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 Guangdong Investment Limited are associated (or correlated) with Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Everspin Technologies go up and down completely randomly.

Pair Corralation between Guangdong Investment and Everspin Technologies

Assuming the 90 days horizon Guangdong Investment Limited is expected to under-perform the Everspin Technologies. In addition to that, Guangdong Investment is 1.24 times more volatile than Everspin Technologies. It trades about -0.02 of its total potential returns per unit of risk. Everspin Technologies is currently generating about 0.03 per unit of volatility. If you would invest  657.00  in Everspin Technologies on January 17, 2024 and sell it today you would earn a total of  114.00  from holding Everspin Technologies or generate 17.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.64%
Values	Daily Returns

Guangdong Investment Limited  vs.  Everspin Technologies

Guangdong Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangdong Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Everspin Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everspin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Guangdong Investment and Everspin Technologies

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

The idea behind Guangdong Investment Limited and Everspin Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.