Correlation Between Guangdong Investment and Suez SA

Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Suez SA 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 Suez SA 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 Suez SA, you can compare the effects of market volatilities on Guangdong Investment and Suez SA 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 Suez SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Suez SA.

Diversification Opportunities for Guangdong Investment and Suez SA

0.0

Correlation Coefficient

Guangdong Investment  Suez SA

Pay attention - limited upside

The 3 months correlation between Guangdong and Suez is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Suez SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suez SA 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 Suez SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suez SA has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Suez SA go up and down completely randomly.

Pair Corralation between Guangdong Investment and Suez SA

If you would invest (100.00) in Suez SA on January 20, 2024 and sell it today you would earn a total of  100.00  from holding Suez SA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Guangdong Investment Limited  vs.  Suez SA

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.

Suez SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suez SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Suez SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guangdong Investment and Suez SA

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

The idea behind Guangdong Investment Limited and Suez SA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.